Annual Report 2002 - Puncak Niaga · Malaysian-German Chamber of Commerce Member since 2002 and...
Transcript of Annual Report 2002 - Puncak Niaga · Malaysian-German Chamber of Commerce Member since 2002 and...
A n n u a l R e p o r t 2 0 0 2
Cover Concept
"Source of LIFE"
Rivers have been the life source of livingcommunities since time immemorial. Theirfresh, ever-flowing waters support life, carrylife and above all, nourish the lives of allthose who reside within them and aroundtheir productive plains.
This year, our Annual Report cover paystribute to the mighty Sungai Selangor,whose strength, versatility and ability to sustain growth wherever it flows aretrue reflections of Puncak Niaga’sinherent qualities.
As Malaysia’s Leading Water Specialist,Puncak Niaga practises the higheststandards of excellence and integrity in allthat it pursues. Like the nurturing river,we do our utmost to ensure that thequality and outcome of our core activitiessignificantly enhance the quality of life for our customers, our shareholders andour country.
And just as the river flows continuouslyforward, Puncak Niaga works relentlesslytowards increasing its strength and value,surging ahead to become Malaysia’sLeading and Dynamic Integrated WaterServices Company.
Cover Photo: Sungai Selangor meandering throughthe lush terrain.
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Pull Out
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Sixth Annual General Meeting
Date :Wednesday, 25 June 2003Time :9.30 a.mVenue :Banquet Hall
Kuala Lumpur Golf & Country ClubNo. 10 Jalan 1/70D Off Jalan Bukit Kiara 60000 Kuala Lumpur
Corporate Information
Fact Sheet
Financial Highlights
Financial & Share Performances
Corporate Profile
Corporate Structure
Organisation Structure
Corporate Achievements
Board of Directors
Senior Management
Vision & Mission Statements
Executive Chairman Speaks
Operations Review
Corporate Calendar of Events
Statement on Corporate Governance
Statement on Internal Control
Audit Committee Report
Risk Management Policy & Report
Investor Relations Policy & Report
Environmental Policy & Report
Organisational Safety and Health Policy
Quality Policy
Newspaper Clippings
Distribution Schedule of Equity Securities & Property
Financial Reports
Notice of Annual General Meeting
Statement Accompanying the Notice ofAnnual General Meeting
Other Compliance Information
Proxy Form
Board of DirectorsYBhg Tan Sri Rozali Ismail
Executive Chairman
Encik Ruslan Hassan
Executive Vice Chairman/
Executive Director
Corporate Affairs Division
Encik Mat Hairi Ismail
Executive Director
Finance Division
Ir Lee Miang Koi
Executive Director
Project & Business Development Division
Encik Abdul Majid Abdul Karim
Independent Non-Executive Director
YBhg Dato' Hari Narayanan Govindasamy
Independent Non-Executive Director
YB Dato' Seri Dr Ting Chew Peh
Independent Non-Executive Director
Group Company SecretaryMadam Tan Bee Lian, MAICSA 7006285
Registered OfficeSuite 1401-1406, 14th Floor
Plaza See Hoy Chan
Jalan Raja Chulan
50200 Kuala Lumpur
Tel : 03-2031 8648
Fax : 03-2078 4386
Principal OfficeSuite 2601-2606, 26th Floor
Plaza See Hoy Chan
Jalan Raja Chulan
50200 Kuala Lumpur
Tel : 03-2031 8648
Fax : 03-2031 8658
website : www.puncakniaga.com.my
e-mail (general) : [email protected]
e-mail (investors) : [email protected]
Date and Place of Incorporation7 January 1997, Malaysia
Company Number416087-U
AuditorsMessrs PricewaterhouseCoopers (AF 1146)
Tax AdvisorPricewaterhouseCoopers Taxation
Services Sdn Bhd (464731-M)
Principal BankersRHB Bank Berhad (6171-M)
Bumiputra-Commerce Bank Berhad (13491-P)
United Overseas Bank (Malaysia) Berhad (271809-K)
SolicitorsMessrs Kadir, Andri Aidham & Partners
Messrs Wong & Partners
Messrs Lee Hishammuddin
Messrs Sivananthan
Messrs Ng Yook Woon, Andrew TC Saw & Co
Messrs Azian Haslina & Co
Corporate Information
Puncak Niaga Holdings Berhad Annual Report 2002 2
Share Registrar(Place where all registers of securities are kept)
Tenaga Koperat Sdn Bhd (118401-V)
20th Floor, Plaza Permata
Jalan Kampar
Off Jalan Tun Razak
50400 Kuala Lumpur
Tel : 03-4041 6522
Fax : 03-4042 6352
Stock Exchange ListingMain Board of Kuala Lumpur Stock
Exchange (KLSE) under the
Infrastructure Project Companies Sector
Indices KLSE Composite Index
KLSE Syariah Index
MSCI Index
Audit CommitteeChairman:
Encik Abdul Majid Abdul Karim
Members:
YBhg Dato' Hari Narayanan Govindasamy
YB Dato' Seri Dr Ting Chew Peh
Encik Mat Hairi Ismail
Secretary:
Madam Tan Bee Lian
Remuneration Committee Chairman:
YB Dato' Seri Dr Ting Chew Peh
Members:
YBhg Dato' Hari Narayanan Govindasamy
Encik Abdul Majid Abdul Karim
Encik Mat Hairi Ismail
Secretary:
Madam Tan Bee Lian
Nomination CommitteeChairman:
YB Dato' Seri Dr Ting Chew Peh
Members:
YBhg Dato' Hari Narayanan Govindasamy
Encik Abdul Majid Abdul Karim
Secretary:
Madam Tan Bee Lian
Compliance, Internal Control and Risk Policy Committee (CICR)Chairman:
YB Dato' Seri Dr Ting Chew Peh
Members:
Encik Ruslan Hassan (Head of CICR)
Encik Sonari Solor
Mr Ng Wah Tar
Madam Tan Bee Lian
Secretary:
Encik Mohammed Sofian Ismail
(Head of Risk Management Section)
Puncak Niaga Holdings Berhad Annual Report 2002 3
Puncak Niaga Holdings Berhad Annual Report 2002 4
Fact Sheet
PUNCAK NIAGA HOLDINGS BERHAD’S FACT SHEET AS AT 29 APRIL 2003
Group Staff Strength
Management Staff 55
Executive Staff 177
Non-Executive Staff 373
Total 605
No. of Puncak Niaga’s Water Treatment Plants 28
No. of Water Treatment Plants with ISO Certifications 14
Authorised Share Capital RM1,000,000,000
Paid-Up Share Capital RM439,278,000 (comprising 439,278,000 ordinary shares of RM1.00 each)
Number of RUN Issued 546,875,000
RUN Coupon Rates 2.5% per annum for the first 10 years and 3.5% per annum for the remaining 5 years
RUN Semi-Annual Coupon Payment Dates 20 May and 20 November
RUN Maturity Date 18 November 2016
RUN Holders’ Put Option Date 20 November 2011
Number of Warrants Issued 109,374,869
Warrant Conversion Price RM2.62
Number of Warrants Converted None
Warrant Maturity Date 20 November 2006
Effective Date of ESOS 25 February 2002
Expiry Date of ESOS 24 February 2007
ESOS Exercise Price (1st Tranche) RM2.37 per share
ESOS Exercise Price (2nd Tranche) RM2.47 per share
ESOS Exercise Price (3rd Tranche) RM2.13 per share
Number of ESOS Offered (1st Tranche) 33,422,000
Number of ESOS Offered (2nd Tranche) 2,933,000
Number of ESOS Offered (3rd Tranche) 2,817,000
Number of ESOS Exercised To-Date 1,778,000
List Of Corporate Memberships:-1. Malaysian Water Association Member since 19942. Malaysia South-South Association Member since 19953. Federation of Public Listed Companies Member since 1999
4. Malaysian Employers Federation Member since 1999
5. Malaysian Industry-Government Group For Member since 2001High Technology (MIGHT)
6. Malaysian-German Chamber of Commerce Member since 2002and Industry (MGCCI)
7. National Institute of Occupational Safety Member since 2002and Health (NIOSH)
8. American Water Works Association (AWWA) Member since 2002
9. Malaysian-French Chamber of Commerce Member since 2002and Industry (MFCCI)
10. British Malaysian Chamber of Commerce Member since 2003
List Of Water Treatment Plants Telephone Nos.
1. Ampang Intake* 03-4291 4040
2. Batang Kali* 03-6057 3255
3. Bernam River Headworks* 03-6046 1259
4. Bukit Nanas* 03-2078 0782
5. Bukit Tampoi* 03-8768 6216
6. Cheras Mile 11* 03-8736 0427
7. Gombak* 03-6189 5255
8. Kalumpang 03-6049 1366
9. Kepong 03-6274 9495
10. Kuala Kubu Bharu 03-6064 1327
11. North Hummock* 03-3341 2052
12. Rantau Panjang* 03-3271 0948/9133
13. Salak Tinggi* 03-8706 1103
14. Sungai Batu* 03-6189 0267
15. Sungai Buaya 03-6028 1146
16. Sungai Dusun 03-6046 3649
17. Sungai Keroh 03-6274 9495/03-6091 0001
18. Sungai Langat* 03-9074 9430
19. Sungai Lolo 03-9075 3977/03- 9021 5993
20. Sungai Pangsoon 03-9021 5993
21. Sungai Pusu 03-6189 5255/03-6185 6631
22. Sungai Rangkap 03-6091 0001
23. Sungai Rumput 03-6185 6631
24. Sungai Selangor Phase 2* 03-3279 2008
25. Sungai Selisek 05-454 2003
26. Sungai Serai 03-9075 3977
27. Sungai Tengi 03-6042 2035
28. Wangsa Maju* 03-4143 7006
*Water Treatment Plants with ISO 9002 Certification.
Puncak Niaga Holdings Berhad Annual Report 2002 5
Puncak Niaga Holdings Berhad Annual Report 2002 6
CourseCharting our
Puncak Niaga Holdings Berhad Annual Report 2002 7
From the onset of itsjourney high above inthe Titiwangsa Range,the Selangor River worksto achieve the perfectbalance between theamount of water it carries, and the sediment it transportsdownstream.
Guided by a clearvision to become theLeading and DynamicIntegrated WaterServices Company, Puncak Niaga is continuously striving to balance the development of existing waterresources with our economic, social andenvironmental responsibilities.
Financial Highlights
Puncak Niaga Holdings Berhad Annual Report 2002 8
In RM’000 Year 2002 Year 2001 Year 2000Balance sheet
Property, plant and equipment 1,528,703 1,606,425 1,659,010
Project development expenditure 245,838 255,727 248,967
Other non-current assets 185,740 236,520 50,045
Current assets 907,107 601,693 561,935
Total tangible assets 2,856,603 2,688,980 2,507,973
Issued and paid-up capital
Share capital 439,278 437,500 437,500
Reserves 737,906 555,724 376,410
Shareholders’ fund 1,177,184 993,224 813,910
Net tangible assets per share (RM) 2.66 2.24 1.83
Ratios and statistics
Turnover 565,105 552,337 350,564
Net profit after tax 179,745 179,314 91,225
Interest bearing debt 1,529,608 1,585,076 1,579,372
In senEarnings per share 40.99 40.99 21.84
In % of turnoverOperating profit 32 32 26
In timesGearing ratio 1.30 1.60 1.94
Current ratio 3.66 2.72 2.11
FINANCIAL CALENDARFinancial year end 31 December 2002
Announcement of results
1st quarter results ended 31 March 2002 21 May 2002
2nd quarter results ended 30 June 2002 21 August 2002
3rd quarter results ended 30 September 2002 21 November 2002
4th quarter results ended 31 December 2002 26 February 2003
Audited Accounts for the financial year ended 31 December 2002 23 April 2003
Published Annual Report 3 June 2003
Annual General Meeting 25 June 2003
Financial & Share Performances
Puncak Niaga Holdings Berhad Annual Report 2002 9
FINANCIAL PERFORMANCE
SHARE PERFORMANCE
500
600
700
800
900
1000
1100
CI Share Price (RM)
1999 2000 2001 2002
20m
40m
60m
80m
1.70
1.90
2.10
2.30
2.80
3.50
J F M MA NA S OJ J M MAJ FD NA S OJ J M MAJ FD NA S OJ J M MAJ FD DNA S OJ J
Total Tangible AssetsProfit After TaxationRM '000 RM '000
98 99 00 01 02 98 99 00 01 02 98 99 00 01 02
TurnoverRM '000
183,
415 347,
472
552,
337
350,
564 56
5,10
5
57,2
26
98,9
72 179,
314
91,2
25
179,
745
2,04
2,77
6
2,50
7,97
3
2,10
7,69
5
2,85
6,60
3
2,68
8,98
0
Monthly HighestClosing Prices
KLSEComposite Index (CI)
Volume of sharestraded
Monthly LowestClosing Prices
Puncak Niaga Holdings Berhad (PNHB) was incorporated on 7 January 1997 under the Malaysian Companies
Act, 1965 as a public company limited by shares. It is an investment holding company with interest in
infrastructure activities specialising in water treatment engineering and water-related activities.
PNHB was listed on the Main Board of Kuala Lumpur Stock Exchange (KLSE) on 8 July 1997. It is the first
water treatment and supply concession company to be listed on the KLSE under the Infrastructure Project
Company guidelines issued by the Securities Commission.
As an investment holding company, PNHB acted as the listing vehicle for Puncak Niaga (M) Sdn Bhd (PNSB),
an Infrastructure Project Company (IPC). PNSB is the holder of two concessions awarded by the Selangor State
Government. The first, a Privatisation Cum Concession Agreement (PCCA) awarded on 22 September 1994
allowed PNSB to take over, operate, maintain, manage, rehabilitate and refurbish 27 existing water treatment
plants formerly under the management of the Selangor Waterworks Department, now corporatised and known as
Perbadanan Urus Air Selangor Berhad. The second concession, a Construction Cum Operation Agreement
(CCOA) was awarded on 22 March 1995 to finance, design, construct, operate, manage and maintain a new 950
million litres per day water treatment plant at Bukit Badong under the Selangor State Government’s Sungai
Selangor Water Supply Scheme Phase 2 Project (SSP2). Both the PCCA and CCOA provide for the concessions to
expire on 31 December 2020.
Under the CCOA, the development of the SSP2 Water Treatment Plant was undertaken in two stages. The first
stage, with a production capacity of 475 million litres per day, was completed in October 1998, two months
ahead of the commitment given to the Selangor State Government. The second stage of the SSP2 Water
Treatment Plant, with a production capacity of 475 million litres per day was originally scheduled for
completion and commissioning on 1 January 2002. Instead, it was completed and commissioned one year ahead
of schedule on 1 January 2001.
During the water crisis in 1998, PNSB was entrusted by the Federal Government to finance, design and
construct the Wangsa Maju Water Treatment Plant at a cost of RM122.0 million. This water treatment plant
was completed in a record time of six months, an amazing feat by engineering standards. The above mentioned
early completion of projects clearly exemplifies Puncak Niaga’s excellent capabilities in managing and
undertaking large-scale water supply projects in Malaysia.
In recognition of Puncak Niaga’s expertise and vast experience in water privatisation projects over the past years,
PNHB was invited by the Negeri Sembilan State Government to participate in the privatisation of Jabatan
Bekalan Air Negeri Sembilan (JBANS) in 2000. On 20 December 2000, PNHB signed a Memorandum of
Understanding to undertake the proposed privatisation which PNHB will hold a 30% equity stake in NS
Water Konsortium Sdn Bhd, the concession company which has been granted the exclusive privatisation rights
of JBANS by the Negeri Sembilan State Government.
Today, PNSB is the largest water supply concessionaire in Malaysia. We operate, manage and maintain 28 water
treatment plants with a total average production capacity of 1,903 million litres per day. This volume is
equivalent to approximately 56% of the treated water requirement in the State of Selangor Darul Ehsan and the
Federal Territory of Kuala Lumpur.
Puncak Niaga Holdings Berhad Annual Report 2002 10
Corporate Profile
Puncak Niaga Holdings Berhad Annual Report 2002 11
Corporate Structure
Puncak Niaga Holdings Berhad Annual Report 2002 12
Puncak Niaga Holdings BerhadInvestment Holding and
Provision of Management Services
Puncak Niaga (M) Sdn Bhd
100%operation, maintenance,management, construction andundertaking the rehabilitationand refurbishment of watertreatment facilities
Unggul Raya (M) Sdn Bhd
100%operation, management,
maintenance and monitoringthe operation of dams
Puncak Research Centre Sdn Bhd
100%dormant
Puncak Seri (M) Sdn Bhd
100%dormant
NS Water System Sdn Bhd
100%dormant
NS Water Management Sdn Bhd
40%dormant
Ideal Water Resources Sdn Bhd
100%operation, management, maintenance and undertaking the rehabilitation and refurbishment of water treatment plants
�
Organisation Structure
Puncak Niaga Holdings Berhad Annual Report 2002 13
General Manager Internal Audit
Encik Sonari Solor
Strategic Resource Centre
Puncak Niaga Holdings Berhad
Finance DivisionExecutive DirectorEncik Mat Hairi Ismail
General Manager Finance & AccountsMr Ng Wah Tar
Assistant General ManagerFinance Encik Ismail Maidin
Senior Manager AccountsEncik Nik Azmi Nik Yaacob
General ManagerOperations ITuan Syed Danial Syed Ariffin
Senior General ManagerOperations IIIr Loh Kit Mun
Senior Manager/Plant Manager SSP2 WTPIr Ausamah DarwishMohd Daud
Manager/Plant ManagerWangsa Maju WTPEncik Abdul Rahman Kadir
Ope
rati
ons
I
Ope
rati
ons
II
Senior ManagerRehabilitation of WTPEncik Nasir Ismail
Senior Manager Operation Contract Supervision (26 WTPs)Encik Hashim Omar
Senior Manager Water Resources & Environmental/Dam Operations Puan Roowina Merican A
Rahim Merican
Human Resources& Administration Division Acting Executive DirectorEncik Ruslan Hassan
Corporate Affairs Division Executive DirectorEncik Ruslan Hassan
Project & BusinessDevelopment DivisionExecutive DirectorIr Lee Miang Koi
General ManagerHuman Resources & AdministrationEncik Ahmad Fauzi Yahya
Senior General Manager Corporate CommunicationsEncik Ibrahim Ismail
Senior Manager Business DevelopmentIr Ahmad Marzuki Hashim
Senior Manager Project ManagementEncik Ishak Awang
General Manager LegalMadam Chan Siew Meei
Senior General ManagerSecretarial/GroupCompany SecretaryMadam Tan Bee Lian
Senior ManagerContractIr Teh Lee Ngo
Senior ManagerTrainingEncik Said MuhamadKhalil Abdul Madza
Manager Manpower Services & Industrial RelationsPuan Poziah Abas
Manager Protective ServicesEncik Saadon Kardi
Manager AdministrationEncik Kamarulzaman Abu Bakar
Manager Special ProjectIr Lee Chok Beng
Operation Division Acting Executive DirectorEncik Ruslan Hassan
Executive Vice ChairmanEncik Ruslan Hassan
Executive ChairmanYBhg Tan Sri Rozali Ismail
Manager Compensation & Benefits Vacant
Assistant General ManagerInformation TechnologyEncik Mohd SabaruldinChe Bakar
Corporate Achievements
Puncak Niaga Holdings Berhad Annual Report 2002 14
MSOSH OSH GRAND AWARD 2001by Malaysian Society For Occupational Safety And Health for
Sungai Selangor Phase 2 Water Treatment Plant, 31 July 2002
MSOSH OSH GOLD AWARD 2001by Malaysian Society For Occupational Safety And Health for
Wangsa Maju Water Treatment Plant, 31 July 2002
ROC-MAICSA COMPANY SECRETARY AWARD 2001Awarded to Puncak Niaga’s Group Company Secretary/Senior
General Manager, Secretarial Department, Madam Tan Bee Lian,
under the Listed Company Category, 22 July 2002
In its relentless pursuit towards excellence, Puncak Niaga continuously strives to achievethe highest standards of excellence in its corporate and operational activities. As in theprevious years, the Group continued to garner several prestigious awards and accoladesfor the year 2002 as follows:-
ASIA WATER MANAGEMENT EXCELLENCE AWARD 2002Awarded to Puncak Niaga’s Executive Chairman, YBhg Tan Sri RozaliIsmail under the Individual Award Category during the Water 2002International Water Technology, Equipment, Services & ManagementExhibition & Conference, 26 March 2002
Puncak Niaga Holdings Berhad Annual Report 2002 15
ASIAMONEY CORPORATE GOVERNANCE POLL 2002Voted Best Corporate Governance Standards in the Utilities Sector
in Malaysia, 20 February 2003
ANUGERAH CITRA LAPORAN TAHUNAN 2002Hadiah Penghargaan by Dewan Bahasa dan Pustaka for correct usage of
the national language in the Annual Report 2001, 17 December 2002
NATIONAL ANNUAL CORPORATE REPORT AWARDS (NACRA) 2002 Industry Excellence Award under the Construction & Infrastructure Project
Companies’ Category, 31 October 2002
ANUGERAH KESELAMATAN & KESIHATAN PEKERJAANKEBANGSAAN 2002
Sijil Penghargaan to Puncak Niaga (M) Sdn Bhd for Facilities Category organised by Ministry of Human Resources, 7 October 2002
ERNST & YOUNG ENTREPRENEUR OF THE YEAR AWARD-MALAYSIA 2002
YBhg Tan Sri Rozali Ismail was identified as a Top 10 Nominee under theMaster Entrepreneur Category, 16 January 2003
Puncak Niaga Holdings Berhad Annual Report 2002 16
FlowDirecting the
Puncak Niaga Holdings Berhad Annual Report 2002 17
The banks of the riversteer its course; yet itis ever-shifting,accommodating changewhen needs arise.
Just like the river banks, theManagement ofPuncak Niaga provides vital support to our Group of Companies;steadily guidingthem through theirrespective missionswhile simultaneouslyadvancing with thetimes to effectuatebetter efficiency.
Board Of Directors
Puncak Niaga Holdings Berhad Annual Report 2002 18
Puncak Niaga Holdings Berhad Annual Report 2002 19
From left to right:
Encik Abdul Majid Abdul Karim,
YBhg Tan Sri Rozali Ismail,
Encik Ruslan Hassan,
Encik Mat Hairi Ismail,
Ir Lee Miang Koi,
YB Dato’ Seri Dr Ting Chew Peh,
YBhg Dato’ Hari NarayananGovindasamy.
YBhg Tan Sri Rozali Ismail, aged 46, Malaysian
Executive Chairman
YBhg Tan Sri Rozali is the founder of PNSB, the Executive Chairman and a substantial shareholder of
PNHB. He was appointed to the Board of PNHB on 24 April 1997. Upon obtaining a Bachelor of Laws
Degree from the University of Malaya in 1981, he began his career as Legal Advisor with the Urban
Development Authority (UDA) before joining Bank Islam (M) Berhad in 1983. Together with a few pioneer
bank staff, YBhg Tan Sri Rozali conceptualised the first institution of Islamic banking in Malaysia.
Subsequently, he started his own legal practice as an Advocate and Solicitor for 7 years, specialising in
corporate, property and banking work.
In 1989, YBhg Tan Sri Rozali set up a family-owned company and embarked into the property
development sector, with involvement in several development projects in the Klang Valley, Kuantan and
Johor. Under the banner of Puncak Alam Housing Sdn Bhd, he is now actively developing a new township
known as Bandar Baru Puncak Alam. The family-owned company also ventured into the utility business in
1989 with the setting up of PNSB. Due to his vast experience in various fields, he was entrusted by the
Selangor State Government, via PNSB, to manage the water treatment plants for the whole of the State of
Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur. PNHB was subsequently incorporated in
1997 as the holding company of PNSB and was listed on the Main Board of Kuala Lumpur Stock Exchange
(KLSE) on 8 July 1997.
On 6 November 2001, YBhg Tan Sri Rozali was conferred the Fellowship Award by the Institute of
Marketing Malaysia for his invaluable contribution to the Institute and the marketing fraternity, in
recognition of his superb marketing strategies adopted for the Bandar Baru Puncak Alam and Bandar Puncak
Perdana projects. On 26 March 2002, he was awarded the Asia Water Management Excellence Award 2002
(Individual Award Category) in recognition of his outstanding contributions in championing management
excellence and best practices in the water industry.
More recently, on 16 January 2003, YBhg Tan Sri Rozali was honoured as a Top 10 Nominee for the
inaugural Ernst & Young Entrepreneur Of The Year - Malaysia 2002 (Master Entrepreneur Category)
Award in recognition of his outstanding entrepreneurship and leadership skills.
Currently, YBhg Tan Sri Rozali is the Executive Chairman and substantial shareholder of U-Wood Holdings
Berhad, a KLSE Main Board company which is developing Bandar Puncak Perdana, a 243-hectare mixed
development project located near the Sultan Abdul Aziz Shah Airport. He is also the Executive Chairman
and substantial shareholder of WWE Holdings Bhd, a KLSE Second Board company which is an investment
holding company and contractor for the provision of engineering services related to design, fabrication,
installation and commissioning of water, wastewater treatment, environmental facilities and construction
activities. YBhg Tan Sri Rozali also sits on the Board of several other private companies and is the Deputy
President of the Malaysian Water Association (MWA).
YBhg Tan Sri Rozali is the Chairman of PNHB’s ESOS Option Committee and is related to another
PNHB Director, Encik Mat Hairi Ismail (his younger brother) who serves as PNHB’s Executive Director,
Finance Division. He is also related to Encik Shaari Ismail (his elder brother) who is a substantial
shareholder of the Company.
Puncak Niaga Holdings Berhad Annual Report 2002 20
Board Of Directors
Puncak Niaga Holdings Berhad Annual Report 2002 21
YBhg Tan Sri Rozali Ismail,Executive Chairman
Encik Mat Hairi Ismail, Executive Director, Finance Division
Puncak Niaga Holdings Berhad Annual Report 2002 22
Encik Ruslan Hassan,Executive Vice Chairman andExecutive Director, Corporate Affairs Division
Board Of Directors
Encik Ruslan Hassan, aged 47, Malaysian
Executive Vice Chairman and Executive Director, Corporate Affairs Division
Encik Ruslan joined PNSB on 1 November 1995 as Head of Corporate Affairs Division. His
appointments to-date are to the PNSB Board on 26 December 1996, to the Board of Directors of PNHB
on 24 April 1997 and as the Executive Vice Chairman of PNHB on 6 April 1999. Currently, he is the
Head of PNHB’s Compliance, Internal Control and Risk Policy Committee and a member of PNHB’s
ESOS Option Committee.
As the Executive Vice Chairman of PNHB, Encik Ruslan oversees the day-to-day management of
the PNHB Group, especially in the areas of corporate affairs, operations, human resources and
administration.
After obtaining a Bachelor of Laws Degree from the University of Malaya in 1981, Encik Ruslan began
his career as Legal Advisor with Esso Production Malaysia Inc. In 1985, he joined Pernas Sime Darby
Holdings Sdn Bhd as Group Legal Advisor/Company Secretary. Encik Ruslan has 6 years’ experience as
an advocate and solicitor. In 1993, he joined Rashid Hussain Berhad as Corporate Affairs Senior General
Manager and Executive Committee Member. From November 1995 to February 2003, Encik Ruslan sat
on the Board of Rashid Hussain Berhad and Rashid Hussain Securities Sdn Bhd and served as an Audit
Committee member of both companies. He also sits on the Board of several other private companies.
Encik Mat Hairi Ismail, aged 41, Malaysian
Executive Director, Finance Division
Appointed to the Board of PNSB on 24 May 1994 and then to the Board of PNHB on 24 April 1997, Encik
Mat Hairi is the Executive Director, Finance Division and also a member of PNHB’s Audit Committee,
Remuneration Committee and ESOS Option Committee. He graduated from Universiti Kebangsaan
Malaysia in 1985 with a Bachelor in Accounting (Hons) Degree and is a member of the Malaysian Institute
of Accountants (MIA). In 1985, he started his career as an Accountant at the Accountant General’s Office
in Labuan, and from 1989 to 1992 he served at the Malaysian High Commission in London. Prior to
joining PNSB, Encik Mat Hairi’s last appointment was with the Langkawi Development Authority
(LADA) (1992-1994).
Encik Mat Hairi is the Executive Director (Corporate Services Division) and substantial shareholder of
WWE Holdings Bhd, a KLSE Second Board company which is an investment holding company and
contractor for the provision of engineering services related to design, fabrication, installation and
commissioning of water, wastewater treatment, environmental facilities and construction activities. He
is also a Non-Executive Director and substantial shareholder of U-Wood Holdings Berhad, a KLSE Main
Board company and sits on the Board of several other private companies. Encik Mat Hairi is related to
YBhg Tan Sri Rozali Ismail (his elder brother) who is the Executive Chairman and substantial
shareholder of PNHB. He is also related to another substantial shareholder of PNHB, Encik Shaari
Ismail (his eldest brother).
Puncak Niaga Holdings Berhad Annual Report 2002 23
Puncak Niaga Holdings Berhad Annual Report 2002 24
Board Of Directors
Ir Lee Miang Koi, aged 49, Malaysian
Executive Director, Project & Business Development Division
Ir Lee joined PNSB in 1995 and is responsible for all aspects of PNHB Group’s project management and
business development for new water supply projects. Ir Lee was appointed as a Director of PNSB on
2 February 1999 and subsequently to the Board of PNHB on 1 September 1999. He is also a member of
PNHB’s ESOS Option Committee.
Ir Lee graduated as a civil engineer from University of Technology Malaysia in 1978 and in 1989, he obtained
a Masters Degree in Engineering majoring in water supply and wastewater engineering from the Asian
Institute of Technology in Bangkok. Ir Lee has 25 years’ experience in the water supply sector and has held
various positions during his tenure with the Public Works Department as well as the Waterworks Department
in Malaysia, especially in the field of water supply services. He was previously a Senior Executive Engineer in
the Design and Planning of the Water Supply Branch in the Public Works Department Headquarters and also
Director of the Negeri Sembilan Waterworks Department. He left the Public Works Department in 1991 to
join Ranhill Bersekutu Sdn Bhd, holding positions from Senior Engineer to Vice President. Ir Lee is also a
director of several other private companies within the PNHB Group.
YB Dato’ Seri Dr Ting Chew Peh, aged 60, Malaysian
Independent Non-Executive Director
YB Dato’ Seri Dr Ting joined PNHB on 15 July 2000 as an Independent Non-Executive Director and a
member of the Audit Committee. Currently, he is the Chairman of PNHB’s Nomination Committee,
Remuneration Committee and Compliance, Internal Control and Risk Policy Committee. He graduated
with a Bachelor of Arts Degree from the University of Malaya in 1970 and obtained a Master of Science
from the University of London in 1972. He also holds a Doctorate in Philosophy, which he obtained from
the University of Warwick in 1976.
YB Dato’ Seri Dr Ting started his career as a lecturer in the Faculty of Humanities and Social Sciences at
Universiti Kebangsaan Malaysia from 1974 to 1980 and was subsequently an Associate Professor of the said
Faculty until 1987. Between 1979 to 1986, YB Dato’ Seri Dr Ting published two books entitled ‘Konsep
Asas Sosiologi’ and ‘Hubungan Ras dan Etnik’.
In 1987, YB Dato’ Seri Dr Ting ventured into politics with his election as a Member of Parliament for
the Gopeng constituency, which he holds until today. He previously served as Parliamentary Secretary of
the Ministry of Health (1988-1989), Deputy Minister of the Prime Minister’s Department (1989-1990)
and Minister of Housing and Local Government (1990-1999). Currently, YB Dato’ Seri Dr Ting is the
Secretary-General of the Malaysian Chinese Association (MCA) and the Chairman of the Port Klang
Authority. He also sits on the Boards of Pan Malaysia Capital Berhad Group, Pan Malaysia Holdings
Berhad and Hua Yang Bhd which are listed on the Main Board of KLSE, and also serves as director of
several other private companies.
Puncak Niaga Holdings Berhad Annual Report 2002 25
Ir Lee Miang Koi, Executive Director, Project & Business
Development Division
YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director
Puncak Niaga Holdings Berhad Annual Report 2002 26
YBhg Dato’ Hari NarayananGovindasamy,Independent Non-Executive Director
Encik Abdul Majid Abdul Karim, Independent Non-Executive Director
Board Of Directors
YBhg Dato’ Hari Narayanan Govindasamy, aged 53, Malaysian
Independent Non-Executive Director
YBhg Dato’ Hari Narayanan was appointed to the Board of PNHB on 1 July 1999 as an Independent
Non-Executive Director. He is also a member of PNHB’s Audit Committee, Remuneration Committee and
Nomination Committee. He holds a Bachelors Degree in Electrical and Electronics Engineering from the
Polytechnic of Newcastle-Upon-Tyne, England. He is a member of the Institute of Engineers, Malaysia and
a Registered Professional Engineer with the Board of Engineers, Malaysia. He is also a Director of Tenaga
Nasional Berhad, SP Setia Berhad, Lembaga Lebuhraya Malaysia, Asian Institute of Medicine, Science and
Technology and several other private companies.
Encik Abdul Majid Abdul Karim, aged 44, Malaysian
Independent Non-Executive Director
A past PNSB Director (1994-2001), Encik Abdul Majid was appointed to the Board of PNHB on
24 April 1997 as an Independent Non-Executive Director. He is the Chairman of PNHB’s Audit Committee
and a member of the Remuneration Committee and Nomination Committee. He obtained a Bachelor of
Science (Hons) Degree in Civil Engineering from the University of Glasgow, United Kingdom in 1986. He
began his career as a Technical Assistant with the Urban Development Authority (UDA) (1982-1983), as
Property Executive at Boustead Holdings Berhad (1986-1991) and subsequently as Sales Engineer at UAC
Berhad (1991-1993). Encik Abdul Majid also sits on the Board of several other private companies.
Notes:
1. Save as disclosed above, none of the Directors have:-
(a) any family relationship with any Directors and/or substantial shareholders of the Company;
(b) any conflict of interest with the Company; and
(c) any conviction for offences (other than traffic offences) within the past 10 years.
2. The respective Directors’ interests in the Company’s equity securities are detailed in pages 106 and 109
of the Annual Report.
Puncak Niaga Holdings Berhad Annual Report 2002 27
From left to right:
Encik Ibrahim Ismail,
Madam Loh Lim Chai Kheng,
Ir Loh Kit Mun,
Madam Chan Siew Meei,
Encik Sonari Solor,
Mr Ng Wah Tar,
Encik Ahmad Fauzi Yahya,
Tuan Syed Danial Syed Ariffin,
Madam Tan Bee Lian,
Encik Azizul Nizam Bidin.
Senior Management
Puncak Niaga Holdings Berhad Annual Report 2002 28
Puncak Niaga Holdings Berhad Annual Report 2002 29
Puncak Niaga Holdings Berhad Annual Report 2002 30
Senior Management
Encik Azizul Nizam Bidin, aged 35, Malaysian
Executive Director, Puncak Seri (M) Sdn Bhd
Encik Azizul was appointed Executive Director of Puncak Seri (M) Sdn Bhd, a wholly-owned subsidiary of
PNHB on 24 September 1998. He holds a Diploma in Management from the Malaysian Institute of
Management (MIM) and a Diploma in Hotel Management from Stamford College Group.
In late 1996, Encik Azizul set-up a family owned company focusing in the automotive industry. Through
his achievements and experiences as an entrepreneur for 11 years, he has also participated in joint
ventures or partnerships with Multi National Companies (MNCs) from countries such as USA, Australia
and South Korea which offer domestic services in Malaysia.
In addition to his involvement in entrepreneurship and politics, he is also active in contributing his
leadership qualities in Yayasan GerakBakti Kebangsaan (YGK) and is a committee member of The
Sultan Abdul Hamid College Old Collegians Association (SAHOCA).
Encik Ibrahim Ismail, aged 46, Malaysian
Senior General Manager, Corporate Communications
Encik Ibrahim joined PNSB in April 1997 as General Manager of the Corporate Affairs Division. He
graduated with a Bachelor of Laws Degree in 1981 from the University of Malaya and holds a Master of
Laws Degree obtained in 1989 from the University of London. He began his legal career with the Judicial
& Legal services, serving as a Magistrate from 1981 to 1982. He left the service to join a private practice
and was the Dean for the Faculty of Law at Universiti Kebangsaan Malaysia (1988-1992). He served with
Petronas as Senior Legal Counsel in its Gas Division (1995-1996) and Senior Manager for the Market
Development Department of Malaysia LNG Tiga Sdn Bhd (1996-1997).
He has 22 years’ experience in various aspects of litigation, conveyancing and corporate work. He is
currently the Senior General Manager of the Corporate Communications Department.
Ir Loh Kit Mun, aged 49, Malaysian
Senior General Manager, Operations II
Ir Loh joined PNSB in April 1998 and oversees the operation, maintenance and rehabilitation of 26 WTPs,
contract supervision, dam operations, water resources, environmental matters and initial development of
the Geographical Information System (GIS). Upon graduation from the University of Malaya with a
Bachelor of Civil Engineering Degree in 1978, he worked as an Engineer with the Drainage and Irrigation
Department (1978-1980). Then he served as Chief Engineer (last designation) at SMHB Sdn Bhd
(1980-1993), Associate at Ranhill Bersekutu Sdn Bhd (1993-1995) and General Manager (Infrastructure)
at KL Linear City Sdn Bhd (1995-1998). His 25 years of working experience covers areas pertaining to
irrigation drainage, hydrology, water resources and supply, design and construction of dams, river
engineering, drainage and flood mitigation, infrastructure development, environmental assessment,
development of GIS, management of engineering projects and operation of water treatment plants.
Madam Tan Bee Lian, aged 37, Malaysian
Senior General Manager, Secretarial/Group Company Secretary
Madam Tan has more than 14 years of corporate secretarial experience in both private and public listed
companies. She joined PNSB in November 1994 as Company Secretary. She has been the Group Company
Secretary of the PNHB Group since January 1998. In January 2003, she was promoted to Senior General
Manager, Secretarial. Madam Tan is a Fellow of both the Malaysian Association of the Institute of Chartered
Secretaries and Administrators (MAICSA) and the Institute of Company Secretaries Malaysia (ICSM). Prior
to joining PNSB, she worked in the Secretarial & Legal Department of Project Lebuhraya Utara-Selatan
Berhad (PLUS) and was the Assistant Company Secretary of Metramac Corporation Sdn Bhd/Metacorp
Berhad, a company listed on the Second Board of the Kuala Lumpur Stock Exchange.
On 22 July 2002, Madam Tan emerged as the winner of the ROC-MAICSA Company Secretary Award
2001 for the Listed Company Category in recognition of her excellence, competence and professionalism as
a Chartered Secretary.
Encik Ahmad Fauzi Yahya, aged 42, Malaysian
General Manager, Human Resources & Administration
Encik Ahmad Fauzi joined PNSB in January 2002 as General Manager, Human Resources & Administration.
His responsibilities include to develop and implement the Group's Human Resources policies as approved
by the Board and to maintain good working relations with the Group's in-house unions. He graduated from
the Eastern Michigan University, USA, with a Bachelor of Business Administration degree majoring in
Human Resource Management. He has 17 years of extensive working experience in Japanese and American
multinational companies and has exposure in various disciplines such as human resources, public relations,
marketing and sales. His last employment was with Mobil Oil Malaysia Sdn Bhd (now known as ExxonMobil
Malaysia), where he served since 1991.
Puncak Niaga Holdings Berhad Annual Report 2002 31
Madam Chan Siew Meei, aged 46, Malaysian
General Manager, Legal
Madam Chan joined PNSB in May 1998 as General Manager, Legal. She obtained her Bachelor of Laws
Degree from the University of Malaya in 1981. During the course of her 22-year career, Madam Chan has
served as an Advocate and Solicitor, lecturer, company secretary and as legal adviser to two public listed
companies. Her employment portfolio covers very diverse activities ranging from the timber and plantation
sectors to engineering, property and manufacturing. As such, apart from her legal and corporate duties, she
has attained considerable experience in administration, human resources and company secretarial work.
Madam Loh Lim Chai Kheng, aged 42, Malaysian
General Manager, Executive Chairman’s Office
Madam Loh Lim joined PNSB as General Manager, Executive Chairman’s Office in November 2000. Her
portfolio covers feasibility assessment of potential investments and projects, planning and setting up of
new projects and investments, including assisting in drawing up financing, agreements and
systems set up. She is a member of the Malaysian Institute of Certified Public Accountants (MICPA) and
the Malaysian Institute of Accountants (MIA). Madam Loh Lim has 20 years of working experience in the
areas of audit, accounting, corporate finance, company secretarial and operations.
Mr Ng Wah Tar, aged 39, Malaysian
General Manager, Finance & Accounts
Mr Ng commenced his articleship with an accounting firm in 1984. He is a member of the Malaysian
Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA). After
spending 10 years in the accounting profession where he last served as Audit Manager for 3 years, he joined
United Engineers (M) Berhad (UEM) as the Accountant of its Trading Division in 1994. He was
subsequently promoted to Senior Manager, Finance in 1997 and subsequently transferred to the
Management Services Division overseeing the finance and accounting functions of UEM. After serving
UEM for 6 years, Mr Ng joined PNSB in March 2000 as General Manager, Finance & Accounts.
Puncak Niaga Holdings Berhad Annual Report 2002 32
Senior Management
Encik Sonari Solor, aged 46, Malaysian
General Manager, Internal Audit
Encik Sonari has more than 15 years’ experience in auditing and accountancy in public listed companies
dealing in property development, manufacturing, timber and consultancy services. He is a member of the
Malaysian Institute of Accountants (MIA) and a fellow member of The Chartered Association of Certified
Accountants (UK). He also holds a professional qualification from the Chartered Institute of Management
Accountants (UK). Prior to joining PNSB in 1998, Encik Sonari served as Group Divisional Chief, Internal
and Management Audit of Land & General Berhad, Chief Operating Officer of Sepakat Computer
Consultants Sdn Bhd, Audit Manager of DMIB Berhad and Accountant of Utusan Melayu Berhad.
Tuan Syed Danial Syed Ariffin, aged 45, Malaysian
General Manager, Operations I
Tuan Syed Danial graduated in 1981 with a BSc. (Hons) Degree in Civil Engineering from University of
Aston in Birmingham, United Kingdom. He joined PNSB in December 1995 and currently holds the
position of General Manager, Operations I Department. Prior to joining PNSB, he worked with the Pahang
Public Works Department for 10 years, holding positions from Project Engineer (1981-1983) to District
Engineer for JKR Cameron Highlands (1983-1991) and the Selangor Water Works Department between
1991 to 1995 whereby he was the Senior Project Engineer overseeing the construction of the Sungai
Selangor Phase 1 Project.
Puncak Niaga Holdings Berhad Annual Report 2002 33
Vision & Mission Statements
Puncak Niaga Holdings Berhad Annual Report 2002 34
To Be The Leading And Dynamic IntegratedWater Services Company.
• To provide a synergy of socio-economicproducts and services in the realm of water treatment, management and distribution and other related businesses.
• To cater to the increasing challenges inthe demand for high quality water production and distribution through thecontinuous implementation of high quality standards, efficient services,human resources development, innovativetechnology and operational systems.
• To actively participate in regional andglobal business opportunities with linkages to the Company’s core activitiesand related interests.
• To actively support and participate inprogrammes and activities aimed atuplifting the community’s living standards and value systems in line withthe aspirations of Vision 2020.
• To address national and internationalconcerns pertaining to the protection,conservation and enhancement of thenatural environment we live in.
Our Vision
Our Mission
Puncak Niaga Holdings Berhad Annual Report 2002 35
To Our Dear Shareholders
On behalf of the Board of Directors of Puncak Niaga Holdings Berhad, I am pleased to present to you the
Annual Report of the Group and of the Company for the financial year ended 31 December 2002.
FINANCIAL REVIEW
The Group achieved a total gross revenue of RM565.11 million for the financial year ended 31 December
2002, an increase of 2.3% compared to RM552.34 million for the financial year ended 31 December
2001. The increase in total gross revenue is attributed to the annual upward adjustment in the bulk
supply rate. Despite an increase in financing cost, profit before taxation for the current financial year rose
0.24% to RM180.11 million compared to RM179.69 million for the preceding financial year as a result
of the higher total gross revenue coupled with lower operating cost.
Executive Chairman Speaks
Puncak Niaga Holdings Berhad Annual Report 2002 36
Puncak Niaga Holdings Berhad Annual Report 2002 37
CORPORATE DEVELOPMENT
The Employees’ Share Option Scheme (ESOS) which was approved by the shareholders of the Company
on 26 June 2001, became effective on 25 February 2002. The ESOS is to enable the Executive Directors
and eligible employees of the Group to participate in the future growth of the Group. It is also designed
to reward and retain key employees and attract new employees with skills vital for improvement of the
operations and continued growth of the Group.
The ESOS exercise price for the 1st tranche was fixed at RM2.37 per share on 25 February 2002 based
on a 10% discount of the 5 days weighted average market price. On 26 August 2002, the exercise price
for the 2nd tranche ESOS to newly eligible employees of the Group was fixed at RM2.47 per share, also
based on a 10% discount of the 5 days weighted average market price. More recently, the exercise price
for the 3rd tranche was fixed at RM2.13 per share on 26 February 2003 based on a 10% discount of the
5 days weighted average market price.
For the RM546,875,000 Nominal Value 15-Year Redeemable Unconvertible Junior Notes (RUN) which
were listed on 28 November 2001, the Company had made two semi-annual coupon payments at 2.5% per
annum totaling RM13,671,875 to the holders of the RUN. The first coupon payment was made on 20 May
2002 while the second payment was made on 20 November 2002. The third payment will be made on
20 May 2003.
None of the 109,374,869 free detachable warrants which were issued with the RUN has been converted
to-date due to the sluggish market condition. (Note: Warrant conversion price is at RM2.62)
INDUSTRY OUTLOOK
Under the Eighth Malaysian Plan period from years 2001 to 2005, a total of RM3.97 billion has been
allocated for the development of the nation’s water resources. This represents an increase of 43% over that
provided for under the Seventh Malaysian Plan. The key objective of the Eighth Malaysian Plan is ‘Growth
With Resilience’, increasing efficiency, productivity and reliability of service through continuous review
and stricter enforcement of performance standards and technical specifications by using the latest proven
technologies. The focus would be on efficiency in the management of the nation’s water resources to ensure
the nation will have an adequate supply of safe water. The Group’s corporate objectives in the water supply
business are very much in line with the foregoing to participate in any opportunity that may arise in the
process of the implementation of the Eighth Malaysian Plan by the Government.
The Group’s areas of operations in the State of Selangor Darul Ehsan and the Federal Territory of Kuala
Lumpur currently have a population of 5.55 million and are estimated to grow by 10% by year 2005,
including inward migration from other states in Malaysia. Current water consumption estimated at 3,400
million litres per day is expected to grow by 6% to 8% per annum for the next five years. Industrial and
commercial users account for about 34% of total metered consumption while residential and other
consumers account for the balance.
The process of corporatisation or privatisation of state water authorities has continued from the Seventh
Malaysian Plan period. The Terengganu Water Supply Department, the Penang Water Authority and the
Selangor Water Supply Department have been corporatised and the water authorities for Melaka, Negeri
Sembilan, Pahang, Perak and Sabah are slated either for corporatisation or privatisation under the current
Plan period.
The Group is keeping abreast with the progress of this development so as to seize any opportunities that
may arise for the participation by the Group.
Insufficient water resources in the State of Selangor Darul Ehsan, Melaka and Pulau Pinang are foreseen as
all viable water sources to meet the continued growth in water demand in those states have already been
fully exploited. Inter-state and inter-basin water transfers will become a necessary feature to overcome
shortfalls in supply for water-deficit states. The Federal Government has put in efforts to enhance
inter-basin water transfers such as from the Kelinchi Dam in the Muar River Basin to the Terip Dam in the
Puncak Niaga Holdings Berhad Annual Report 2002 38
Executive Chairman Speaks
Linggi River Basin, Negeri Sembilan. The engineering study and design for the inter-state water transfer
from Pahang to Selangor, which involves the construction of the Kelau Dam and a 45-kilometer tunnel,
was completed in year 2000. The Pahang-Selangor Raw Water Transfer Project is designed to transfer a
maximum capacity of 2,400 million litres per day of raw water through pipelines and a tunnel from Pahang
to Selangor as well as the Federal Territory of Kuala Lumpur and subsequently to Negeri Sembilan. This
proposed inter-state water transfer project once implemented by the Federal Government would provide
the Group with opportunities to expand its range of water-related businesses.
PRODUCTIVITY AND QUALITY IMPROVEMENTS THROUGH INFORMATION &COMMUNICATION TECHNOLOGY (ICT) AND RESEARCH & DEVELOPMENT(R&D) INVESTMENTS
Water treatment techniques are continuously being fine-tuned to produce good quality potable water. The
processes are adopted after continuous R&D studies to enhance operational efficiency which in turn reduced
the operating costs of water treatment plants without compromising on the quality of the treated water
produced by our plants. The Group has increased the use in applications of ICT to help establish databases
for the operational requirement and Management’s decision-making. The Group’s IT infrastructure has also
been upgraded in phases for both hardware and software to increase staff efficiency and productivity.
Drinking water must be clear, colourless and odourless. It must be pleasant to drink and free from all
harmful micro-organisms, chemicals and radiochemical contaminants and within the safety and quality
standards set by the Ministry of Health under the National Guidelines for Drinking Water Quality. During
the year, the Group continued its R&D works. The most notable achievement from our R&D efforts is
the improvement in effective manganese removal process in treated water as well as efficiency gains in
modification of the process system such as flouride dosing of treated water.
CORPORATE GOVERNANCE
Our Statement on Corporate Governance is set out on pages 68 to 76.
There were no sanctions, reprimands and/or penalties imposed on either the Company or the Group,
Directors or Management by the relevant regulatory authorities during the year.
ENVIRONMENTAL PROTECTION INITIATIVES
The environmental conditions of the Group’s areas of operations impact significantly on the level and
quality of service and product delivered to end-users. During the year, a total of six Environmental Impact
Studies were conducted to ensure that the Group’s activities continue to be carried out in an environmentally
responsible manner. Sanitary Surveys and Water Quality Monitoring are conducted throughout the year as
part of the operational and monitoring programmes. We work closely with the governmental authorities to
stop any third-party activity that may have the potential to cause pollution to our water sources.
Puncak Niaga Holdings Berhad Annual Report 2002 39
Whilst safeguarding the security and safety of drinking water, the Group’s environmental programmes also
play an important role in helping the Government to prevent environmental degradation by ignorant or
irresponsible parties.
The Group is in the process to construct a sludge treatment plant at the Wangsa Maju Water Treatment
Plant at our cost as further contribution towards environmental protection. Four sludge lagoons have
already been constructed at the SSP2 Water Treatment Plant. This clearly demonstrates our commitment
towards environmental protection and emphasises the need for sludge treatment facilities at the water
treatment plants for proper treatment of sludge. We are hopeful that these pilot sludge treatment facilities
would persuade the Government to allocate funds and authorise the construction of similar sludge
treatment facilities at all the water treatment plants under our management.
CORPORATE SOCIAL RESPONSIBILITIES
In line with the Group’s philosophy of being a caring and responsible corporate citizen, the Group has
continuously supported various charitable non-profit organisations such as Pusat Zakat Selangor, UMNO
Bumiputra Education Fund, PUSPANITA Fund and local orphanages whereby a total of RM1,482,273.40
was donated to these organisations during the financial year.
LOOKING FORWARD
Up to the third quarter of year 2002, Malaysia’s Gross Domestic Product (GDP) growth has been driven by
strong domestic demand and has also benefited from the recovery in exports. The Government’s fiscal and
expansionary monetary policies put in place have buoyed the domestic economy. Exports expanded on the back
of a gradual recovery in electronics, while primary commodity exports have done well with the upsurge in
prices. The year 2002 Bank Negara Annual Report indicated real GDP expanded by 4.2%. However, the
economy is expected to be negatively affected for the year 2003, given the weak world economy and uncertain
threats posed by the Severe Acute Respiratory Syndrome (SARS) virus and the aftermath of the Iraq war.
Malaysia’s GDP is projected to decelerate to 3.7% in 2003 in view of the foreseeable
weaknesses in the external sector even though the Government had announced that the fiscal stimulus
package would mitigate the impact on the country’s economy.
The Group has pursued various water-related business opportunities in the domestic as well as in the
regional markets. Relying on its core competencies, the Group continues to actively pursue growth in
potable water-related projects in the various states in Malaysia, trying to secure a share of the
corporatisation or privatisation opportunities arising from the various state water authorities.
I am pleased to report a recent success in our business forays. On 22 November 2002, the Company has, on
behalf of a Consortium comprising the Company, Lanco Infratech Ltd and Kris Heavy Engineering &
Construction Sdn Bhd signed a contract with the Chennai Metropolitan Water Supply and Sewerage Board
of India on the Chennai Water Supply Augmentation Project 1 – Package III (Chennai Project). The
Chennai Project which involves the supply and laying of water supply pipelines, including a 5-year
operation and maintenance contract, is worth a total contract sum of Rs292,47,05,102.76 or approximately
RM234 million. PNHB holds a 70% stake in the Consortium.
Puncak Niaga Holdings Berhad Annual Report 2002 40
Executive Chairman Speaks
On the domestic front, NS Water Konsortium Sdn Bhd (NSWK), the water concession company which has
been granted the exclusive privatisation rights of Jabatan Bekalan Air Negeri Sembilan (JBANS) is still
engaged in negotiations on the terms and conditions of the concession agreement for the privatisation of
JBANS. The Company will hold a 30% equity stake in NSWK.
The substantial amount of account receivables has remained high despite our collection efforts. There is
however, negligible risk of default and the Group has remained engaged with our customer to resolve the
issue of slow payments. Whilst it may be a concern for shareholders, there are opportunities inherent in
staying engaged in negotiations for strategic positioning that may well yield the Group favourable
business opportunities in the process of resolving the issue.
The world and the Malaysian economies weigh heavily on the global business confidence where it is now
in a stage of uncertainty. However, the water supply business where the Group is engaged is resilient
towards economic vagary since water is a basic necessity. The challenge for the year 2003 as recognised
by the Board of Directors is to achieve growth in the Group’s business amidst such uncertainty and
increasing market competition.
ACKNOWLEDGEMENTS
On behalf of the Board of Directors of Puncak Niaga Holdings Berhad, I would like to express my sincere
thanks and utmost appreciation to our valued customers, end-users and shareholders for their continued
support and trust.
My gratitude and thanks also go to our Management and all employees for their hard work, dedication and
commitment. It is with their continued support, loyalty and commitment that the Group is able to face
the challenges and take advantage of any business opportunities that may arise in future.
Last but not least, our special thanks to the
various Governmental authorities and agencies,
Non-Governmental Organisations (NGOs), our
business and strategic partners, associates, suppliers
and financiers, all of whom have contributed
significantly to our successes this past year and who
would continue to play an important role in our
future success.
Tan Sri Rozali Ismail
Executive Chairman23 April 2003
Puncak Niaga Holdings Berhad Annual Report 2002 41
YBhg Tan Sri Rozali Ismail, a Top 10 Nominee for the Ernst & YoungEntrepreneur of The Year-Malaysia 2002 (Master EntrepreneurCategory) Award
Puncak Niaga Holdings Berhad Annual Report 2002 42
OpportunitiesCarving New
Puncak Niaga Holdings Berhad Annual Report 2002 43
The power generated bythe river allows it tocarve out new landscapes;forming fresh tributariesand spreading its area ofinfluence to enable thegrowth of new regions.
Backed by years ofexperience and knowledge, PuncakNiaga is in the positionto take on newopportunities; creatingeven more innovativeproducts and services tofurther grow ourbusiness while enhancing the livingstandards of our communities.
Sungai Selangor Phase 2 Water Treatment Plant
During the year 2002, the Sungai Selangor Phase 2 (SSP2)
Water Treatment Plant continued to operate smoothly. A
total of 321.82 million cubic meters of treated water was
produced at the plant, marking an increase of 30% from the
247.34 million cubic meters produced in 2001. The rise was
attributed to the extension of water supply to the Klang and
Shah Alam areas via the Bukit Mayong Reservoir.
SSP2 Water Treatment Plant’s reliability for year 2002 stood
at 100%, with water production stabilised to 881.70 million
litres per day. There was no incident of any violation in
treated water quality nor any major shutdown throughout the year. This was largely due to the on-line
monitoring system and stringent control measures in place.
As part of PNSB’s commitment to ensure clean water supply to the consumers, SSP2 Water Treatment
Plant in collaboration with Perbadanan Urus Air Selangor Berhad (PUAS) undertook the cleaning of two
reservoirs during the year. The first was at Matang Pagar Reservoir in May 2002 and the second at Bukit
Mayong Reservoir in June 2002. Due to the slippery floor and the high chlorine fumes in the tank at
Matang Pagar Reservoir, the work was considered dangerous. The Emergency Response Plan was activated
with strict safety and health regulations imposed. With proper planning and coordination, cleaning works
at both reservoirs were carried out smoothly and successfully without any interruption to water supply or
complaints from the consumers.
In July 2002, SSP2 Water Treatment Plant was awarded the MSOSH’s Grand Award for its excellence in
safety management systems at the plant. SSP2 Water Treatment Plant is one of only four
companies/facilities in the country to be conferred with this prestigious award.
After two comprehensive surveillance audits conducted by Lloyd’s Register Quality Assurance of United
Kingdom, SSP2 Water Treatment Plant has once again maintained its ISO 9002 accreditation. This bears
testimony to the hard work and dedication of the entire team at the plant, who has remained totally
committed to achieving the highest standards in quality of plant operations.
In compliance with the latest standard requirements and to ensure continuity of the management process, SSP2
Water Treatment Plant has targeted to upgrade the current Quality Management System ISO 9002:1994 to
ISO 9001:2000 by July 2003. Our competent employees are currently conducting the exercise in-house.
Puncak Niaga Holdings Berhad Annual Report 2002 44
Operations Review
SSP2 Water Treatment Plant
Puncak Niaga Holdings Berhad Annual Report 2002 45
SSP2 Water Treatment Plant has also targeted to be accredited with the Environmental Management
System ISO 14001:1996 and Safety & Health Management System OHSAS 18001:1999. At this
juncture, awareness training and preparation of documentation is being carried out and the plant is on
schedule to obtain certification in May 2003. With the certification, SSP2 Water Treatment Plant will
be the first water treatment plant in the country to obtain a system that is integrated with quality,
environment and safety.
In October 2002, SSP2 Water Treatment Plant took the initiative to carry out the chemical exposure
monitoring to check the concentration of airborne chemicals. Results showed that the plant is in compliance
with the Permissible Exposure Limit (PEL) set by the Department of Safety and Health (DOSH), Malaysia.
Wangsa Maju Water Treatment Plant
For the year 2002, Wangsa Maju Water Treatment Plant’s
production stood at 16.65 million cubic meters of treated
water, an increase of 25% from the 13.33 million cubic meters
achieved in year 2001. This increase in production was mainly
due to the additional areas that had to be supplied by the plant
during the prolonged drought from February to September
2002. Average daily production for Wangsa Maju Water
Treatment Plant in year 2002 was 45.61 million litres per day.
Like SSP2 Water Treatment Plant, Wangsa Maju Water
Treatment Plant enjoyed 100% performance in year 2002, with
no shutdown or violation in the quality of water produced.
After two surveillance audits conducted by Lloyd’s Register Quality Assurance of United Kingdom,
Wangsa Maju Water Treatment Plant has successfully maintained its ISO 9002 accreditation. This
achievement reflects PNSB’s commitment towards producing quality water through disciplined
management processes that improve plant operations. For the year 2003, we have targeted to upgrade the
plant’s current Quality Management System ISO 9002:1994 to ISO 9001:2000 by July 2003 and are on
course for the Environmental Management System ISO 14001:1996 accreditation in December 2003.
In July 2002, Wangsa Maju Water Treatment Plant, in its first attempt at the MSOSH safety competition,
won the prestigious Gold Award for excellence in safety management systems at the plant, marking once
again, its commitment to excellence.
In an effort to improve security, a state-of-the-art Digital Video Security Surveillance System (DVR) was
installed to enhance security features at the plant. The pilot project, which will eventually be extended to
Wangsa Maju Water Treatment Plant
Puncak Niaga Holdings Berhad Annual Report 2002 46
all water treatment plants, is equipped with digital recording, motion detector, alarm system,
auto-dialling and remote viewing to provide full video surveillance of the water treatment plant. Thus
far, it has helped to reduce the number of security guards required at the plant.
Operations Of 26 Water Treatment Plants Under PCCA
In year 2002, the 26 water treatment plants operated by Puncak Niaga under the PCCA produced 344.22
million cubic meters of treated water, which is 9.18% above the designed capacity. This, however, signifies
a decrease of 3.00% in production compared to that of year 2001.
The decrease in production of treated water from the 26 water treatment plants was mainly due to the
exercise by PUAS to reconfigure the water distribution system in view of the full commissioning of the
SSP2 Water Treatment Plant in October 2000 and the Sungai Rasa Water Treatment Plant in
November 2001. The decrease in production was also attributed to PUAS purchasing water from other
water operators.
Despite the above and there being more than 4,000 hours lost due to unscheduled shutdowns in the year
2002, the 26 water treatment plants’ combined production was still above the PCCA’s designated
quantity. The major cause of the shutdowns was raw water violations, which accounted for 57.7% of the
total shutdowns. Scheduled maintenance accounted for 18.7% of the total shutdowns and 10.8% was due
to electrical power interruptions.
The water treatment plants’ maintenance and production performance continued to be diligently
monitored under the yearly Plant Audit programme. Supplemented by the Competent Electrical
Engineers’ Inspection and the monthly Mechanical and Electrical Corrective Maintenance Inspections,
plant shutdowns were kept to a minimum. In addition, our close rapport with Tenaga Nasional Berhad
(TNB) has assisted in a substantial reduction in shutdown time caused by power failure. Thus far,
TNB has been swift in mobilising standby power generators to any water treatment plants affected by
power interruptions.
Under the PCCA, 12 water treatment plants have received the MS ISO 9002 certification from SIRIM
namely, the Bukit Nanas, Sungai Batu, Bernam River Headworks, Sungai Langat, North Hummock,
Batang Kali, Rantau Panjang, Gombak, Cheras Mile 11, Bukit Tampoi, Ampang Intake and Salak
Tinggi Water Treatment Plants. With 12 water treatment plants under the PCCA being certified MS
ISO 9002, in addition to SSP2 and Wangsa Maju Water Treatment Plants, Puncak Niaga takes pride
that 98% of its total production are from water treatment plants managed according to established
quality assurance standards. This bears strong testimony of Puncak Niaga’s commitment to all-round
service and operational excellence.
Operations Review
Puncak Niaga Holdings Berhad Annual Report 2002 47
Dam Operations
PNSB continues to operate and maintain the Sungai Langat,
Klang Gates and Tasik Subang Dams with prudence and
exercises good practice in releasing the optimal amount of water
for the water treatment plants. The three dams recorded an
annual rainfall difference of +6.02%, -3.08% and +28.96%
respectively in year 2002 as compared to year 2001.
From January to April 2002, all three dams experienced varying
degrees of low rainfall due to the slight effects of the El Nino
phenomena, resulting in several residential areas being affected
by water shortages. Nevertheless, the dams managed to recover
their storage by the end of year 2002.
The Dam Operations Unit continued to work closely with PUAS on the monitoring of the water level and
identification of alternative raw water sources such as ponds and rivers. The operation of the dams is
regulated by the Dam Operations Control Curves developed for each dam.
As part of the dam safety management procedure, the Company has implemented a programme to
constantly survey and monitor the general area, structure and water quality of the dams. Daily
instrumentation readings are taken to gauge the safety of the dams, as well as monthly visual inspections
of the dam areas, particularly along water banks and upstream tributaries. If there are any abnormalities
detected, an environmental investigation would be carried out. All the dams are also constantly monitored
for structural integrity. A regular inspection of the surrounding topography is taken to protect against
landslide formation. In line with international standards and procedures, the Company also allows an
internationally recognised consultant to inspect the dams once in every five years.
BUSINESS DEVELOPMENT
The year 2002 saw the Company spreading its wings and establishing business ties on new shores. Tenders
were submitted for several water-related infrastructure projects, both locally and abroad throughout the year.
As a result of competitive bidding, the Company was successful in securing a new water supply project in
Chennai, India. The Chennai Water Supply Augmentation Project 1 - Package III involves the supply and
laying of 114 km of water supply pipelines with a diameter of 1,750 mm to 1,875 mm in Chennai, India
and the operation and maintenance of the completed works for 5 years. The Company signed a
RM234 million Contract with the Chennai Metropolitan Water Supply and Sewerage Board on
Klang Gates Dam
Puncak Niaga Holdings Berhad Annual Report 2002 48
Operations Review
22 November 2002. Puncak Niaga Holdings Berhad (PNHB) enters the project as part of a consortium
which includes Lanco Infratech Ltd and Kris Heavy Engineering & Construction Sdn Bhd with a 70:20:10
participation ratio.
In light of these developments, the Group remains confident of securing future successes in its business
development efforts and will remain focused in identifying and pursuing new water-related infrastructure projects
in Malaysia and abroad to enhance the Group’s net worth.
RESEARCH AND DEVELOPMENT (R&D)
In order to maintain PNSB’s position at the forefront of the
water industry and to meet the constant demands of producing
high quality water from our water treatment plants, the
Company continues to invest a significant percentage of its
resources into R&D. For the year 2002, the Group spent close
to RM5.2 million on R&D. As a result of these initiatives,
various innovative technologies have been developed and
implemented to increase operational efficiency while reducing
costs at the plants.
During the year 2002, a new fluoridation system was
installed at the SSP2 Water Treatment Plant to improve the
quality of water for prevention of tooth decay. Previously, the fluoride solution in the preparation tank was
transferred to the dosing system through pumps. Through research, the system has been modified to use
ejectors to transfer the solution. This has eliminated the need for electricity and maintenance of the pump
and resulted in cost savings in plant operations without compromising on quality.
The SSP2 Water Treatment Plant had also experienced many technical difficulties with the lime D-mixer.
Leakage of lime through the gland packing had left the chemical room dirty and had also contributed to
high maintenance costs. However, due to extensive research carried out over a nine month period by the
plant employees, the leakage and frequent system breakdowns were subsequently resolved by replacing a
rotating blade with a lighter material.
Other studies have also been successfully conducted to increase the effectiveness of manganese removal in
treated water and removal of excess sand from the sludge plant. All these were done using internal
resources. Not only does this reflect the high level of competency amongst the plant employees, more
importantly, it encourages them to be innovative and directly involved in the Group’s efforts towards
reducing operating costs.
Filter Media Research at SSP2 Water Treatment Plant’s laboratory
Puncak Niaga Holdings Berhad Annual Report 2002 49
INFORMATION TECHNOLOGY (IT)
In line with our continued efforts to improve productivity with IT-driven automation, an exercise was
carried out in year 2002 to replace all IT equipment that was deemed outdated and obsolete. Personal
computers, servers, printers and other peripherals were all replaced, where necessary. In tandem,
productivity tools (software) were also upgraded to the latest versions in this exercise.
Year 2002 saw an increased effort in mitigating the menace arising from software virus attacks through the
Internet and other IT disasters affecting the operations of the Group’s computer systems. An IT Systems
Disaster Recovery Plan was formulated to outline a set of procedures and remedial action plan to guide the
Group to restore lost data, replace faulty hardware and to relocate to a temporary office site in the event of
major calamities.
Inspired by its Corporate Vision to achieve excellence, the IT Department developed its own in-house
Computerised Asset Management System which will ensure effective and efficient asset management for
the Group. The IT Department is currently developing a similar system to better monitor and
administer the maintenance of the Group’s vehicles.
A Computerised Auto Staff Attendance programme has also been implemented to help ensure safety
and security at the workplace. Apart from keeping unauthorised people out of the workplace, the
system also allows the Administration Department to manage and monitor the daily attendance of the
employees with the touch of a button.
For the Group to maintain its competitive edge, the implementation of the mySAP.com system will be
followed by the Human Resource and Payroll modules which is planned to be fully implemented in
year 2003.
Our water treatment plants rely on state-of-the-art systems to ensure the highest standards of operational
quality are met. The Company continues to operate the Supervisory, Control and Data Acquisition (SCADA)
System for centralised monitoring and supervision. This allows tracking of all relevant information and data
from the water treatment plants and dams via real-time at the operations centre. The management of the
maintenance activities at the SSP2 Water Treatment Plant is simplified and assisted by a Computerised
Management System called MAXIMO that enables automated management and control of the activities at
the desktop. Along with the River Warning Monitoring System (RWMS) which are already in operation at
Sungai Langat and Sungai Selangor, the Company is developing a prototype mobile RWMS to analyse raw
water quality and alert the water treatment plants on any potential pollution.
Puncak Niaga Holdings Berhad Annual Report 2002 50
Operations Review
STRATEGIC RESOURCE CENTRE (SRC)
The SRC was set up in 1997 specifically for the purpose of establishing a one-stop centre where
information of strategic importance including water industry research findings, in-house R&D projects’
results and other strategic business intelligence are gathered and disseminated to the relevant
departments within the Group.
It is the Group’s long-term goal to develop a full-fledged think tank, which will be coordinated through the
SRC. It is hoped that the think tank will grow into a strategic business partner of the Company via its industry
and market research reports, informative articles and write-ups. It is SRC’s aspiration to play an active and
important role in Puncak Niaga’s business expansion activities in the domestic and overseas markets.
During the year 2002, SRC produced several informative fact-sheets on other markets as well as write-ups and
reports on relevant issues in the water and water-related industries. SRC intends to become a more active
player in formulating and strategising the Group’s business decisions in the ever-competitive water industry.
CRISIS MANAGEMENT
The Crisis Management Plan (CMP) and the Water Treatment Plant Emergency Response Plan (ERP), which
were put in place in year 2001 and updated in year 2002, enabled the team to be in a constant state of readiness
to respond effectively to any form of emergency, crisis or disaster at the Group’s premises and installations. The
Plans work together to ensure the most effective response to any crisis situation or disaster with minimal
disruption to the Group’s business operations, and most importantly, to protect the Group’s corporate image.
They are constantly reviewed and improved to address any weaknesses noted.
In order to test the effectiveness of the CMP and ERP and to assess the level of readiness of employees from
both the Headquarters and water treatment plants, safety drills and crisis management drills were conducted
during the year, incorporating elements of the Plans. On 30 July
2002, an emergency safety drill was conducted at the Bukit
Nanas Water Treatment Plant and the CMP and ERP were
activated. During the drill, the crisis management procedures on
responding to an emergency situation at the water treatment
plant were tested, reviewed and proven to be effective.
Chemical suppliers, in particular chlorine suppliers, were also
required to have their Crisis Management Plan (CMP) and this
requirement has been incorporated in the Chemical Supply
Agreement. The suppliers’ CMPs were also tested and
coordinated with the CMP and ERP.Emergency safety drill at Bukit Nanas Water Treatment Plant
OCCUPATIONAL SAFETY & HEALTH
Puncak Niaga remains fully committed in ensuring a safe and healthy working environment for its employees.
Guided by the Corporate Safety and Health Committee and realising its duty as a responsible employer, the
Group had increased funding to organise safety and health programmes and activities during the year 2002.
Along with regular training programmes involving chemical disaster and first aid handling, fire-fighting
equipment handling and chemical safety, three significant safety-oriented programmes were also
implemented in year 2002.
On 30 July 2002, an emergency drill was held at the Bukit
Nanas Water Treatment Plant as part of the activities
implemented in relation to the Control of Industrial Major
Accident Hazards Regulations, 1996 (CIMAH). The drill
was held with the participation of several Government and
private agencies such as Bomba dan Penyelamat Wilayah
Persekutuan, Royal Malaysian Police, Department of
Occupational of Safety and Health (DOSH), Department of
Environment (DOE), Enforcement Department from City
Hall and our chemical supplier, CCM Chemical Sdn Bhd.
In October 2002, a series of evacuation talks were also organised and held at Puncak Niaga’s
Headquarters for all Headquarters’ employees. The talks, conducted by Bomba and Penyelamat Wilayah
Persekutuan, were designed to prepare the employees to respond to any emergency within the building
including the use of various types of fire extinguishers.
An Occupational Safety and Health Awareness Talk was conducted at the Stadium Shah Alam on
19 October 2002 for all employees and a speaker was specially invited from the National Institute of
Ocupational Safety & Health (NIOSH) to brief the employees on their respective responsibilities towards
ensuring occupational safety and health in the work place, in line with the Occupational Safety and
Health Act, 1994.
In relation to training on chlorine handling, our employees are regularly sent to the chlorine manufacturer’s
premises to undergo extra training on correct chlorine handling procedures.
Puncak Niaga Holdings Berhad Annual Report 2002 51
Employees receiving training by Bomba dan PenyelamatWilayah Persekutuan
Puncak Niaga Holdings Berhad Annual Report 2002 52
HUMAN RESOURCES MANAGEMENT
The Company continues to implement various programmes and initiatives to encourage work excellence
amongst employees, while at the same time ensuring their welfare. Adopting a pro-active
results-orientated work culture, Puncak Niaga encourages its employees to express their individual views
to help develop and improve the work process.
Employee Unions
The year 2002 saw the signing of the Collective Agreement between PNSB and the Non-Executive
Union (Kesatuan Kakitangan PNSB) on 15 May 2002, which was approved by the Industrial Court
through its consent award on 22 May 2002.
The Executive Union (Kesatuan Eksekutif Syarikat PNSB) is
currently in negotiation with the Company on its Collective
Agreement. To facilitate effective evaluation of the proposed
Collective Agreement, a Collective Agreement Committee
was formed before the commencement of negotiations.
Except for some designated positions, employees of the
Company are free to join either the Executive or
Non-Executive Union. Overall, the relationship between
the Management and Union representatives remains
cordial and co-operation is focused on achieving the
Company’s goals and objectives.
Employees’ Training Programmes
Training is an on-going process and an integral component for the continued success of any organisation.
The underlying purpose of conducting training is to keep the organisation competitive by keeping its
people competitive. It is a straight forward attempt to attain business results through its people. As such,
the training objectives implemented at Puncak Niaga are multiple in nature. They are complementary, yet
far reaching in scope.
All training programmes that were initiated in year 2002 sought to achieve the following three major areas:-
• Define what jobs mean in the organisation.
• Identify and describe the core competencies that premise the jobs.
• Define and describe the developmental interventions which are necessary to ensure the job incumbents
remain competent and current in their set of competencies.
Operations Review
Signing of the First Collective Agreement between Puncak Niaga and the Non-Executive Union
Puncak Niaga Holdings Berhad Annual Report 2002 53
In our efforts to minimise the skill gaps and improve core competencies among our employees, specific
training interventions have been designed to enable them to perform successfully in their jobs. This has
directly benefited the Company by enhancing the employees’ job efficacy towards better productivity.
The training interventions included a broad range of inter-disciplinary training programmes, whereby
employees were exposed to skills outside their immediate areas of expertise. This approach has, to a large
extent, equipped the employees with multi-skill competencies in discharging their duties whilst at the
same time, allowing them to be flexible and adapt to any changes.
The in-house Saturday Encounter programme, which was initiated in 1999, has helped the employees
enhance their understanding with regards to the policies and procedures at departmental and organisational
levels, as well as improving their job knowledge skills. In year 2002, the Training Department successfully
conducted and co-ordinated the following Saturday Encounter programmes:-
• Finance for Non–Finance Managers
• Legal Seminar
• Safety and Health Seminar
• Employees’ Insurance Coverage Policy Talk
• Fire Demonstration and Evacuation Drills
The Group spent RM127,293 for training during the financial year 2002, of which RM43,731 was spent
on in-house programmes and the remaining RM83,562 was used for external training programmes.
Sexual Harassment Committee
Since the formation of the Sexual Harassment Committee comprising a cross-section of employees from
various departments on 20 October 2001, no cases of sexual harassment have been reported in the Group.
The Group’s Sexual Harassment Policy was adopted and officially implemented on 20 October 2001.
In year 2002, the Committee members attended seminars on Sexual Harassment to equip themselves with the
requisite knowledge and skills to handle and investigate any complaints of sexual harassment in the Group.
In March 2002, the Groups’ Sexual Harassment Policy Handbook was distributed to all employees with
the hope that the handbook will provide the employees with a better understanding of what constitutes
sexual harassment, the policies and procedures involved in handling sexual harassment and their respective
roles and rights.
Security Services
The water treatment plants and dams managed by PNSB are considered important strategic assets to the
country. Therefore, PNSB takes the job of protecting these installations very seriously. Maintaining its own
security personnel, PNSB ensures that the security force receives the relevant training to enable them to
carry out their duties effectively.
Apart from the basic Security Guards training received by 98% of the security force, there were also other
courses such as Security Guards Physical Aptitude Test, Basic Investigation Techniques, Top Supervisors and
Police Investigation Courses conducted for the security personnel in year 2002.
EMPLOYEE WELFARE
Foster Parent Programme
The Foster Parent Programme was first initiated in the early days of PNSB, with the aim of creating better
relations and more effective two-way interactive communications between the Headquarters and water
treatment plants’ employees. The programme has proven to be an excellent platform used to identify
problems and difficulties faced by employees at the water treatment plant and for them to channel these
issues to the Management. It also gives Management an in-depth understanding on the roles and functions
of water treatment plants’ employees, creating opportunities for both parties to exchange views pertaining
to their job functions and responsibilities.
Under the programme, the Management is required to visit the respective water treatment plants’
employees under their care once a month. The visits are meant to build rapport and exchange ideas and
views on improving the overall working standard of the water treatment plants. The meetings have proven
to be productive and constructive in addressing issues that would otherwise be left unnoticed.
During the year 2002, the projects that have been carried out under the Foster Parent Programme at the
water treatment plants included the construction of children’s playgrounds, badminton courts, fishponds
and landscape beautification projects on a “gotong-royong” concept.
The refurbishment and construction of children’s playgrounds at the water treatment plants were also initiated
under the programme. The construction of the playgrounds is a continuing project undertaken on a need basis.
During the Hari Raya, Deepavali and Chinese New Year festivals, employees at the water treatment plants
were presented with gifts from the Management. The gifts were delivered together with a message from
the Executive Chairman through the Foster Parents for each of the water treatment plants.
Puncak Niaga Holdings Berhad Annual Report 2002 54
Operations Review
Puncak Niaga Holdings Berhad Annual Report 2002 55
Once again, the programme continued to receive warm support from both the Management and employees
in year 2002. The level of commitment shown by both parties has made the programme a significant
channel for a two-way interactive communication to improve administrative, operational and social matters
of the water treatment plants’ employees.
Quarters Committee
The Quarters Committee, comprising nine members from various departments, was formed in early 2002
to ensure that the housing needs and welfare of the employees at the water treatment plants are being
looked after in accordance with PNSB’s Quarters Policy, which serves as a guide to the Quarters Committee
on the administration of the quarters’ facilities and amenities.
An inventory audit of all the 26 water treatment plants and
its occupants has been completed by the Quarters Committee
for the purpose of updating the records to facilitate a more
efficient management and administration of the quarters.
To monitor the maintenance and upkeep of the quarters and
its amenities throughout the State of Selangor Darul Ehsan
and the Federal Territory of Kuala Lumpur, three quarters
assessments were carried out and reports were prepared to
update the Board.
For year 2002, 22 new applications for quarters or transfers were
processed by the Quarters Committee.
The Quarters Committee held eight meetings throughout the year 2002 and forwarded several
recommendations on improvement of the quarters for the Board’s consideration and approval.
Sports and Recreational Club
Since its establishment in 1994, Kelab Sukan dan
Kebajikan Puncak Niaga (Sports Club) has become a vital
tool in promoting social interaction and integration
between all levels of employees. The Sports Club regularly
organises various social, sports and recreational activities
for the employees.
In year 2002, apart from regular sports activities such as
fishing, volleyball, football and bowling competitions,
there was also a sports carnival organised with JabatanSports Club members participating in a football tournament
SSP2 Water Treatment Plant’s newly built surau
Bekalan Air Negeri Sembilan, the state water agency, with
the intention of establishing better interaction and
rapport between the two organisations. 50 employees,
including the Management, participated in the successful
2-day event held in Seremban.
Educational visits to Petrosains, Kuala Lumpur City
Centre and the Kuala Lumpur Tower were also arranged
for the employees’ children during the school holidays.
The visits were spread over three days since the response
was overwhelming, with 113 children participating in
the field trip.
Special events for religious celebrations such as Ma’al Hijrah
and Ibadah Korban were also organised, along with functions
to celebrate major festivals such as Hari Raya Aidil Adha and
Hari Raya Aidilfitri.
In conjunction with Women’s Day 2002, the women’s section
of the Sports Club, Biro Hawa, organised a Women’s Day
celebration with the theme “Bekerja Dalam Kesepaduan:
Wanita, Hak Asasi Manusia Dan Keamanan” which was held
on 22 June 2002 at the Maple Suite, Jalan Changkat Raja
Chulan, Kuala Lumpur. The event was officiated by YBhg
Puan Sri Faridah Idris, wife of the Executive Chairman and
was attended by the Group’s female employees.
SOCIAL CONTRIBUTIONS
As a caring corporate citizen, Puncak Niaga takes pride in its social and civic responsibilities and
allocates a percentage of its funds for donations to worthy charitable causes. For the financial year 2002,
a total of RM1,421,835 was contributed to various religious and educational foundations, youth, sports
and entrepreneurial associations and other charities. In addition, our Executive Chairman and Senior
Management personnel have contributed many hours of their time to various educational foundations
and community development programmes. The women’s section of the Sports Club, Biro Hawa, organised
Puncak Niaga Holdings Berhad Annual Report 2002 56
Operations Review
Educational visit to Petrosains
YBhg Puan Sri Faridah Idris presenting prizes during theWomen’s Day celebration
Puncak Niaga Holdings Berhad Annual Report 2002 57
an annual outing for orphans in conjunction with the Hari Raya
Aidilfitri celebration, whereby children from three orphanages
were treated with “baju raya” shopping at a departmental store
in Petaling Jaya before breaking fast. Cash donations were also
given to the orphans. The event was graced by YBhg Puan Sri
Faridah Idris, wife of the Executive Chairman.
COMMUNITY RELATIONS
The Company, through its team of dedicated employees,
continues to utilise its resources to help create awareness on the
importance of protection of our natural water sources from all
forms of pollution. Utilising our resources, both monetary and
knowledge, Puncak Niaga supports various schemes and programmes that have been developed and
implemented to educate the local communities on the importance of having access to clean water.
River Rescue Brigade (Briged Penyelamat Sungai)
Established on 14 March 1998, the River Rescue Brigade was the brainchild of Puncak Niaga’s Executive
Chairman, YBhg Tan Sri Rozali Ismail. Its objectives are to create awareness amongst the younger
generation and to educate them on the importance of conservation and protection of our rivers.
The year 2002 saw the River Rescue Brigade grow to 1,110 members from 49 participating schools in the State
of Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur. Activities included visits to water
treatment plants where the school children are exposed to the importance of potable water production and the
effects and prevention of river pollution. News bulletins were distributed to the club members once in every
two months to keep them updated on current water issues and events of the River Rescue Brigade.
Puncak Niaga plans to extend the River Rescue
Brigade to the secondary and tertiary students in
year 2003. There are also plans to organise a
“Perkhemahan Alam Sekitar” or Summer Camp for
its members.
The establishment of the River Rescue Brigade is a clear
indication of Puncak Niaga’s role and commitment in
creating a caring younger generation who are aware of their
environment. It is hoped that the school children will
benefit from the club and will act as catalysts to create a
change of attitude in handling future river pollution issues.
YBhg Puan Sri Faridah Idris shopping with orphans inconjunction with the Hari Raya Adilfitri celebration
River Rescue Brigade event
Operations Review
Educational Outreach Programme (Turun Ke Padang)
Similar to the River Rescue Brigade, the Educational Outreach Programme (EOP) educates our future
generation on the importance of river preservation in ensuring the continuous supply of clean water. Puncak
Niaga has implemented a comprehensive programme where our officers make visits to selected primary
schools in the State of Selangor Darul Ehsan and the Federal Territory of Kuala Lumpur each month.
The EOP was launched on 15 June 1997 by Puncak Niaga’s Executive Chairman, YBhg Tan Sri Rozali
Ismail and was approved by the Education Departments of the State of Selangor Darul Ehsan and the
Federal Territory of Kuala Lumpur respectively.
The EOP highlights the role of Puncak Niaga and other
parties like PUAS in the treatment and supply of water to
the consumers. Talks and video screenings are given on the
importance of the river as a source of clean water and group
activities are organised to allow the students to conduct
their own water treatment experiments.
The students are also quizzed based on the talks and
demonstrations given by the Company’s officers. Currently,
the EOP is purely targeted at primary school students since
we believe that the young will be an agent of change or a
catalyst in the change of attitude towards river preservation.
In year 2002, a total of ten primary schools were selected and visited by Puncak Niaga under the EOP. The
same quota has been set for year 2003.
Workshops, Forums, Exhibitions and Seminars
In year 2002, the Group continued to actively participate in various workshops, forums, exhibitions and
seminars on the privatisation of public water facilities, water industry, environment and investor relations,
as follows:-
1. Water 2002 Expo organised by AMB Exhibitions in collaboration with the Ministry of Works on
26 March 2002.
2. “Bengkel Eksekutif Perniagaan” Workshop organised by Pusat Pungutan Zakat Selangor on
2 May 2002.
Puncak Niaga Holdings Berhad Annual Report 2002 58
Students participating in the EducationalOutreach Programme
3. Presentation of a working paper at the “Pengurusan
Lembangan Sungai Selangor” Seminar organised by
Lembaga Urus Air Selangor and WWF Malaysia on
30 May 2002.
4. Presentation of a paper entitled “Kesan Pencemaran
Terhadap Mutu Air Yang Dirawat Di Loji Rawatan Air”
at the “Bengkel Pengurusan Mutu Air Negeri Selangor”
organised by Jabatan Kesihatan Negeri Selangor on 8 and
9 July 2002.
5. Presentation of a paper entitled “Air: Cabaran, Isu
dan Masa Depan” at the “Air Anugerah Tuhan”
Seminar organised by Institut Kefahaman Islam
Malaysia on 17 July 2002.
6. Water Industry Exhibition organised by PUAS on 25 July 2002.
7. Malaysian Malay Symposium and Exhibition organised by Universiti Kebangsaan Malaysia from 24 to
31 August 2002.
8. KLSE Investors’ Week 2002 from 23 to 29 September 2002.
9. Paya Indah Wetlands Exhibition from 11 to 13 October 2002.
10. Selangor Environmental Week Exhibition from 27 to 29 October 2002.
Puncak Niaga Holdings Berhad Annual Report 2002 59
Presentation of a working paper by PNSB at the“Pengurusan Lembangan Sungai Selangor” Seminar
Puncak Niaga Holdings Berhad Annual Report 2002 60
Corporate Calendar of Events
Executive Chairman’s working visit to Bukit Nanas Water TreatmentPlant, 22 March 2002
Contribution of HaemodialysisMachine, 21 February 2002
12 January 2002• Safety Briefing to employees at the Bukit Nanas Water Treatment Plant by the Fire
and Safety Department.
9 February 2002• Visit by Messrs PricewaterhouseCoopers to the SSP2 Water Treatment Plant.
21 February 2002• Puncak Niaga donated a haemodialysis machine to the Tg Karang District Hospital.
24 February 2002• Puncak Niaga’s Sports & Recreational Club organised a Hari Raya Aidil Adha
Korban Programme at the Sungai Langat Water Treatment Plant.
28 February 2002• Briefing to analysts on the Group’s financial results for
the year ended 31 December 2001.
14 March 2002• Visit by Penang Water Works Department to the Wangsa
Maju Water Treatment Plant.
15 March 2002• Puncak Niaga participated in the Ma’al Hijrah celebration held
at Stadium Bukit Jalil.
22 March 2002• Executive Chairman’s working visit to the Bukit Nanas
Water Treatment Plant in conjunction with the WorldWater Day.
26 - 29 March 2002• Puncak Niaga participated in The Water 2002 Expo held at The Mines Exhibition
and Convention Centre, Kuala Lumpur. In conjuction with the event, YBhg TanSri Rozali Ismail was awarded The Asia Water Management Excellence Award2002 (Individual Award Category).
2 April 2002 • Educational Outreach Programme No. 18 at Sekolah Kebangsaan Pandan
Indah, Ampang.
16 April 2002 • Educational Outreach Programme No. 19 at Sekolah Rendah Jenis Kebangsaan
(Cina) Yit Khwan, Tanjung Karang.
30 April 2002 • River Rescue Brigade No. 12 at Bernam River Headworks Water Treatment Plant,
officiated by YB Dato’ Mohd Sharif Jajang, Selangor State EXCO member.
Launching of River Rescue BrigadeNo. 12, 30 April 2002
PNHB’s Executive Chairman, YBhg Tan Sri Rozali Ismailreceiving the Asia Water Management Excellence Award 2002
(Individual Award Category), 26 March 2002
2 May 2002 • Puncak Niaga participated in the Klang District Water Conservation Campaign, officiated by
YB Dato’ Mohd Sharif Jajang, Selangor State EXCO member.
3 May 2002 • Educational Outreach Programme No. 20 at Sekolah Kebangsaan Bandar, Banting.
4 May 2002 • Puncak Niaga participated in the National Labour Day 2002 celebration, officiated by the Prime
Minister, YAB Dato’ Seri Dr. Mahathir Mohamed at Stadium Malawati, Shah Alam.
15 May 2002 • Signing of the Collective Agreement between Puncak Niaga (M) Sdn Bhd and its Non-Executive Union.
23 May 2002 • Cheque presentation of RM790,153.89 to Pusat Zakat
Selangor, being voluntary business tithing for year 2001.
25 May 2002 • Puncak Niaga participated in the march pass for the
National Maulidur Rasul celebration at Stadium Putra,Bukit Jalil.
30 & 31 May 2002 • Puncak Niaga presented a working paper entitled
“Pengurusan Lembangan Sungai Selangor” at the 2-dayworkshop organised by Lembaga Urus Air Selangor andWorld Wildlife Fund Malaysia at Fraser’s Hill.
12 June 2002 • Educational Outreach Programme No. 21 and donation of 3 computers at Sekolah Kebangsaan
Seksyen 18, Shah Alam.
15 June 2002• Puncak Niaga’s Employees Meeting at Stadium Malawati, Shah Alam.
15 June 2002• Friendly bowling match between TV3 and Puncak Niaga at Bangsar Bowl, Bangsar Shopping
Complex.
22 June 2002• Women’s Day celebration with the theme “Bekerja Dalam Kesepaduan:Wanita, Hak Asasi
Manusia Dan Keamanan”, organised by Biro Hawa at the Maple Suite, Jalan Changkat RajaChulan, Kuala Lumpur.
26 June 2002• PNHB’s 5th Annual General Meeting at the Kuala Lumpur Golf and Country Club.
Puncak Niaga Holdings Berhad Annual Report 2002 61
Signing Ceremony of the CollectiveAgreement, 15 May 2002
Payment of “Zakat Pendapatan” toPusat Zakat Selangor in conjunction
with the Executive Business TitheWorkshop, 23 May 2002
PNHB’s 5th Annual General Meeting, 26 June 2002
Women’s Day celebration,22 June 2002
Puncak Niaga Holdings Berhad Annual Report 2002 62
29 June 2002• Puncak Niaga (PNSB) Sports and Welfare Club’s 8th
Annual General Meeting (AGM) at Stadium Shah Alam.
3 July 2002• Visit by Ministry of Health to the SSP2 Water
Treatment Plant.
4 July 2002• Safety Audit by the Malaysian Society Of Occupational
Safety & Health (MSOSH) to evaluate the operations of theSSP2 Water Treatment Plant for the MSOSH GrandAward Competition.
13 July 2002• Visit by the Chennai Metropolitan Water Supply and Sewerage
Board (CMWSSB), India to the SSP2 Water Treatment Plant.
13 July 2002• Educational Outreach Programme No. 22 at Sekolah Kebangsaan Dato’ Abu
Bakar Baginda, Sepang, Kajang.
16 & 17 July 2002• Puncak Niaga’s Executive Vice Chairman presented a paper entitled “Air,
Cabaran, Isu dan Masa Depan”, at the “Air Anugerah Tuhan” seminarorganised by Institut Kefahaman Islam Malaysia.
20 July 2002• Puncak Niaga contributed RM50,000 to the UMNO Bumiputra
Education Fund during the dinner of the Alumni of Overseas UMNOClubs at the Putra World Trade Centre.
22 July 2002• PNHB’s Group Company Secretary was awarded the ‘ROC-MAICSA
Company Secretary Award 2001’, under the Listed Company Category.
25 July 2002• Puncak Niaga participated in the Water Industry Exhibition in conjunction
with “Seminar Kepenggunaan Air” organised by Perbadanan Urus AirSelangor Berhad at the Grand Blue Wave Hotel, Shah Alam.
30 July 2002• Educational Outreach Programme No. 23 at the Sekolah Kebangsaan
Kuala Selangor.
2 - 4 August 2002• PNHB participated in the Mayban Securities International Investors
Conference held at the Andaman Datai Bay, Langkawi.
Corporate Calendar of Events
PNSB’s Sports and Welfare Club’s 8thAGM, 29 June 2002
CMWSSB’s visit to SSP2 WaterTreatment Plant, 13 July 2002
Alumni of Overseas UMNO ClubsDinner, 20 July 2002
Madam Tan Bee Lian, our Group Company Secretary, receiving the ‘ROC-MAICSA Company Secretary Award 2001’, 22 July 2002
Puncak Niaga Holdings Berhad Annual Report 2002 63
8 August 2002• Educational Outreach Programme No. 24 at
Sekolah Kebangsaan Gombak Setia, Kuala Lumpur.
10 August 2002• Puncak Niaga participated in the ‘Save Water
Campaign’ for the District of Hulu Langat.
10 & 24 August 2002• Visit by employees of Assunta Hospital, Petaling
Jaya to the Wangsa Maju Water Treatment Plant.
17 August 2002• Friendly bowling match between Utusan
Malaysia and Puncak Niaga at the Ampang SuperBowl, Ampang Point.
17 August 2002• Puncak Niaga donated RM50,000 to the PUSPANITA Fund during the Majlis Makan Malam Amal
Sumbangsih 2002 at Dewan Perdana FELDA, Kuala Lumpur.
17 & 24 August 2002• Visit by students of Universiti Putra Malaysia (UPM) to the SSP2 Water
Treatment Plant.
30 August 2002• Puncak Niaga participated in the National Day 2002 march pass at
Dataran Kemerdekaan, Shah Alam.
24-31 August 2002 • Puncak Niaga participated in the exhibition held in conjunction with the
Malaysian Malay Symposium and the 45th National Day Celebration, atDewan Canselor Tun Abdul Razak, Universiti Kebangsaan Malaysia.
9 September 2002• Visit by the Persatuan Perusahaan Air Minum Seluruh Indonesia and
George Kent (M) Bhd to the SSP2 Water Treatment Plant.
10 September 2002 • SSP2 and Wangsa Maju Water Treatment Plants won the Grand Award
and Gold Award respectively for occupational safety and health, organisedby the Malaysian Society for Occupational Safety & Health (MSOSH).
12 September 2002• Visit by students of The Japanese School of Kuala Lumpur to the Wangsa
Maju Water Treatment Plant and Klang Gates Dam.
14 September 2002 • Friendly bowling match between Unit Perancangan Ekonomi Selangor
and Puncak Niaga at Plaza Alam Sentral, Shah Alam.
Malaysian Malay Symposium, 24 August 2002
UPM’s visit to SSP2 Water TreatmentPlant, 17 & 24 August 2002
45th National Day celebration,30 August 2002
MSOSH Occupational Safety and Health Award ceremony, 10 September 2002
Puncak Niaga Holdings Berhad Annual Report 2002 64
17 September 2002 • Educational Outreach Programme No. 25 at Sekolah Rendah Jenis Kebangsaan
Tamil Vivekananda, Petaling Jaya.
19 September 2002 • Visit by students of Universiti Malaya to Wangsa Maju Water Treatment Plant.
23 - 29 September 2002 • PNHB participated in the KLSE Investors’ Week 2002.
28 September 2002• Friendly bowling match between Berita Harian and Puncak Niaga at the
Cosmic Bowl, Sunway Pyramid.
4, 11 & 18 October 2002• Safety Talk by officials of the Fire and Safety Department
on fire and evacuation procedures for high-rise buildings to Puncak Niaga’s employees at the Company’s Headquarters.
10 October 2002• 15 circles participated at Puncak Niaga’s Quality
Control Circle (QCC) Project Presentation.
11-13 October 2002• Puncak Niaga participated in an exhibition held in
conjunction with the launching of Paya Indah Wetlandsby YAB Dato’ Seri Dr Mahathir Mohamad.
17 October 2002• Educational Outreach Programme No. 26 at Sekolah
Kebangsaan Bukit Beruntung, Rawang.
18 October 2002• Puncak Niaga participated in an exhibition held in conjunction with the launching
of the “Kempen Penjimatan Air Negeri Selangor” for Hulu Langat District.
19 October 2002• Occupational Safety and Health Awareness Talk by officials of NIOSH at
Stadium Shah Alam for Puncak Niaga’s employees.
21 October 2002• Puncak Niaga sponsored the ICT Centre at Sungai Choh, Rawang which was
officiated by YAB Menteri Besar Selangor.
26 - 27 October 2002• PNSB/JBANS Mini Sports Carnival held at Sekolah Teknik
Ampangan, Seremban.
Corporate Calendar of Events
Friendly bowling match betweenPuncak Niaga and Berita Harian,28 September 2002
Encik Md Nor Ahmad, KLSE’s Deputy President ExchangeOperations visiting PNHB’s booth during the launch of the
KLSE Investors’ Week 2002, 23 - 29 September 2002
PNSB/JBANS Mini Sports Carnival,26 - 27 October 2002
QCC Project Presentation,10 October 2002
Puncak Niaga Holdings Berhad Annual Report 2002 65
27 - 29 October 2002• Puncak Niaga participated in an exhibition at Stadium Kajang in conjunction with the
Selangor Environmental Week, which was officiated by YAB Menteri Besar Selangor.
29 October 2002• Visit by officials of Health Ministry of Vietnam to the Wangsa Maju Water Treatment Plant.
31 October 2002• PNHB was awarded the NACRA Industry Excellence Award 2002 for the Construction
& Infrastructure Project Companies’ Category for its 2001 Annual Report.
6 November 2002• Educational Outreach Programme No. 27 at Sekolah Kebangsaan Klang.
17 November 2002• Puncak Niaga contributed RM10,000 to ophanages in
conjunction with the “Majlis Berbuka Puasa” ceremony bySelangor UMNO Youth held at the residence of YABMenteri Besar Selangor.
20 November 2002• Puncak Niaga’s Sports and Welfare Club donated RM60,000 to
210 orphans from Asrama Damai Rumah Anak-anak YatimKuang, Pertubuhan Anak-anak Yatim Darul Izzah andPertubuhan Kebajikan Anak-anak Yatim Sekendi.
20 November 2002• “Majlis Berbuka Puasa” for Puncak Niaga’s employees and
210 orphans at Stadium Shah Alam.
23 & 30 November 2002• Visit by students of Universiti Malaya to the Wangsa Maju Water Treatment Plant.
25 November 2002• Company Briefing to EPF officials at the Company’s Headquarters.
29 November 2002• Puncak Niaga donated RM33,000 to four foster families for the Hari Raya
celebration and as educational aid.
17 December 2002• Puncak Niaga was awarded the “Hadiah Penghargaaan, Anugerah Citra Laporan
Tahunan 2001” by Dewan Bahasa dan Pustaka for correct usage of the nationallanguage in its 2001 Annual Report.
18, 20 & 24 December 2002• Educational visit to Petrosains, KLCC & KL Tower by PNSB employees’ children.
28 December 2002• Hari Raya Aidilfitri gathering at the Company’s Headquarters for all employees.
Hari Raya Gathering, 28 December 2002
YBhg Puan Sri Faridah Idrisshopping with orphans for
Hari Raya celebration,20 November 2002
“Majlis Berbuka Puasa” withemployees and orphans,
20 November 2002
PNHB’s Executive Vice Chairman receiving the NACRAIndustry Excellence Award 2002, 31 October 2002
Puncak Niaga Holdings Berhad Annual Report 2002 66
GrowthNurturing and
Sustaining
Puncak Niaga Holdings Berhad Annual Report 2002 67
The river never rests. Itcontinually feeds andnurtures its environs toensure it receives, inreturn, the sedimentsand organisms necessaryto maintain its balanceand sustain the lifewithin its waters.
The success of PuncakNiaga lies not only inthe completion of ourprojects but in thestringent, on-goingcontrols we undertaketo ensure that eachdevelopment operatesat its optimal level ofefficiency at all times.
The Board places utmost importance on the practice of high standards of corporate governance in the
Group’s business dealings and is unreservedly committed towards ensuring that the principles and best
practices of corporate governance as set out in the Malaysian Code on Corporate Governance (the Code) are
complied by the Company. Accordingly, the Board is pleased to report to the shareholders on how the
Company has applied the principles of the Code and complied with the best practices in corporate
governance as set out in the Code.
During the year, proactive steps were taken by the Board to further enhance the Group’s corporate
governance procedures and processes in line with international best practices on corporate governance,
which include:-
• formulation and implementation of the ‘Guidelines for Recommending Candidates for Board
Appointments’ by the Nomination Committee;
• formulation and implementation of the ‘Guidelines for Determining Directors Remuneration’ by the
Remuneration Committee;
• formulation and implementation of the ‘Form of Evaluation of Board Effectiveness’ by the Nomination
Committee; and
• formulation and implementation of the ‘Audit Committee Self-Assessment Form’ by the
Nomination Committee.
BOARD OF DIRECTORS
The Board
The Board takes full responsibility for the performance of the Group and guides the Group towards achieving its
short and long-term objectives, setting corporate strategies for growth and new business development while
providing advice and direction to the Management to enable the Group to achieve its corporate goals, thus
enhancing the shareholders’ investment.
The Board has a formal list of matters reserved for its decision making, including overall Group strategy and
direction, setting the human resources and administration policies, approval of the annual budget, acquisitions
and disposals, corporate exercises, major capital expenditure, operational and financial matters as well as
promoting customer, shareholders and investor relations. Some matters are delegated to the Board Committees
which operate within clearly defined terms of reference.
Composition of the Board
The Board comprises seven members, of whom four are Executive Directors and three are Independent
Non-Executive Directors. There was no change in the Board’s composition during the year 2002.
The profile of the Board is set out on Pages 20 to 27 of the Annual Report.
The Board members are professionals from diverse disciplines, tapping on their respective qualifications and
experiences in law, engineering and accounting. Together, they bring a wide range of business experience
Statement on Corporate Governance
Puncak Niaga Holdings Berhad Annual Report 2002 68
Day Date Time
Wednesday 27 February 2002 4.00 p.m.
Wednesday 24 April 2002 1.00 p.m.
Tuesday 21 May 2002 3.00 p.m.
Wednesday 21 August 2002 4.30 p.m.
Thursday 21 November 2002 4.00 p.m.
The details of the respective Directors’ attendances for the above meetings are as follows:-
Name of Director Designation No. of Meetings held No. of Meetings %during the financial year attended
* YBhg Tan Sri Executive Chairman 5 4 80Rozali Ismail
Encik Ruslan Hassan Executive Vice Chairman 5 5 100
** Encik Mat Executive Director, 5 4 80Hairi Ismail Finance
Ir Lee Miang Koi Executive Director, Project 5 5 100& Business Development
Encik Abdul Majid Independent Non-Executive 5 5 100Abdul Karim Director
***YBhg Dato’ Hari Independent Non-Executive 5 3 60Narayanan DirectorGovindasamy
YB Dato’ Seri Independent Non-Executive 5 5 100Dr Ting Chew Peh Director
* YBhg Tan Sri Rozali Ismail was away on overseas official trip.
** Encik Mat Hairi Ismail was away on Haj leave.
*** YBhg Dato’ Hari Narayanan Govindasamy was unable to attend the Board Meetings as he had to attend other business meetings.
Puncak Niaga Holdings Berhad Annual Report 2002 69Puncak Niaga Holdings Berhad Annual Report 2002
and expertise which are vital towards the effective discharge of the Board’s responsibilities for the
Company’s stewardship and the successful direction and growth of the Group.
More than one third of the Board is represented by Independent Non-Executive Directors who are
independent of the Management and free from any business or other relationship with the Management;
thereby promoting independence in the Board’s deliberations and decision making.
The roles of the Executive Chairman and Executive Vice Chairman are separate, each with clearly defined
responsibilities. YB Dato’ Seri Dr Ting Chew Peh is the Company’s Senior Independent Non-Executive
Director, to whom shareholders’ concerns may be conveyed.
Board Meetings
In year 2002, the Board met five times at the Board Room on 26th Floor, Suite 2601-2606, Plaza See Hoy
Chan, Jalan Raja Chulan, 50200 Kuala Lumpur. The meetings were held as follows:-
To facilitate the smooth transaction of the Group’s business and operations, the day-to-day administration
and management of the Group have been delegated to the Board of Puncak Niaga (M) Sdn Bhd (PNSB),
who met eight times in year 2002, to deliberate and approve on matters related to the Group’s business
including corporate plans and annual budgets, capital investments, project and business development,
internal controls and changes in the Group’s policies and procedures. Performance factors such as product
and service quality and environmental issues were also discussed.
Supply of Information and Access To Advice
All Board Meetings held during the year were preceded by a notice issued by the Group Company Secretary.
The agenda together with the relevant reports and papers for each meeting are made available to the
Directors at least seven days prior to the date of each Board Meeting. The Directors are also given sufficient
time to obtain further information or explanation on matters presented in the Board papers. The matters
tabled during the Board Meetings include:-
• Minutes of Meetings of the Board Committees;
• operational and financial performance reports;
• any changes to the Group’s corporate strategies;
• environmental issues directly affecting the Group’s operations; and
• other special issues which require the Board’s attention and decision.
Where necessary, the Board whether as a full Board or in their individual capacities, may engage
independent professionals at the Company’s expense to advise on issues of concerns to facilitate the proper
discharge of their statutory and fiduciary duties.
All Directors have access to the advice and services of the Group Company Secretary. The Directors are
regularly updated by the Group Company Secretary on the latest developments in the legislations and
regulatory framework affecting the Group and they are also advised on their duties and responsibilities as
well as the implementation of good corporate governance and compliance practices in the Group.
Appointment of Directors
All appointments of new Directors are recommended by the Nomination Committee to the Board for
approval. The Board, through the Nomination Committee, annually reviews the required mix of skills,
experience and other qualities of the Directors to ensure that the Board is functioning effectively and
efficiently. In year 2002, there was no new appointment to the Board as the Board was confident that the
present Board possesses adequate experience and expertise to efficiently oversee and ensure that the Group’s
strategies are properly considered and implemented.
The Company recognises that its Directors may be invited to sit on the Board of other companies. It allows
its Directors to accept non-executive appointments, with the Board’s prior consent and as long as these
appointments are not in conflict with the Company’s interest. The Board is of the view that the exposure
gained by its Directors from the directorships in other companies will be valuable to the Company as it will
enable the Directors to have a wider perspective of various aspects of business.
Statement on Corporate Governance
Puncak Niaga Holdings Berhad Annual Report 2002 70
Re-election of Directors
Article 98 of the Company’s Articles of Association provides that one-third of the Directors shall retire from
office at each Annual General Meeting and being eligible, may offer themselves for re-election.
Upon the recommendation of the Nomination Committee, Encik Mat Hairi Ismail and YBhg Dato’ Hari
Narayanan Govindasamy shall retire by rotation at the forthcoming Annual General Meeting and have offered
themselves for re-election.
Board Committees
To enable the Board to effectively and efficiently discharge its duties, the Board is assisted by the following
Board Committees with their respective approved terms of reference:-
Committee Chaired by
Audit Committee Encik Abdul Majid Abdul Karim, Independent Non-Executive Director
Remuneration Committee YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director
Nomination Committee YB Dato’ Seri Dr Ting Chew Peh, Independent Non-Executive Director
Compliance, Internal Control and Risk Policy YB Dato’ Seri Dr Ting Chew Peh, Committee Independent Non-Executive Director
ESOS Option Committee YBhg Tan Sri Rozali Ismail, Executive Chairman
Management Committee Encik Ruslan Hassan, Executive Vice Chairman
(a) Audit Committee
The Audit Committee Report for the financial year 2002 is set out on pages 79 to 85 of the Annual Report.
(b) Remuneration Committee
The Remuneration Committee comprises the following members:-
Chairman : YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)
Members : YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)
Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)
Encik Mat Hairi Ismail (Executive Director, Finance)
Secretary : Madam Tan Bee Lian (Group Company Secretary)
The terms of reference of the Remuneration Committee are:-
• to establish and annually review the remuneration packages of each individual Executive Director
such that the levels of remuneration are sufficient to attract and retain the Directors needed to run
the Company successfully; and
Puncak Niaga Holdings Berhad Annual Report 2002Puncak Niaga Holdings Berhad Annual Report 2002 71
• to make recommendation to the Board and the respective Directors shall abstain from the
discussion of their own remuneration.
The levels of remuneration of the Executive Directors reflect their experience, level of responsibilities
and contribution to the Company.
The Remuneration Committee met twice during the year 2002 with its members in full attendance. At
the meeting held on 22 January 2002, the Committee recommended the Salary Increment for Year
2002 and Bonus for Year 2001 for the Executive Directors of PNSB for PNSB’s Board’s approval. At
the subsequent meeting held on 1 April 2002, the ‘Guidelines for Determining Directors’
Remuneration’ were adopted for implementation by the Remuneration Committee.
(c) Nomination Committee
The Nomination Committee comprises the following members:-
Chairman : YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)
Members : YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)
Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)
Secretary : Madam Tan Bee Lian (Group Company Secretary)
The terms of reference of the Nomination Committee are:-
• to annually review the required mix of skills and experience and other qualities, including core
competencies which Non-Executive Directors should bring to the Board;
• to recommend to the Board, candidates for all directorships to be filled;
• to recommend to the Board, Directors to fill the seats on Board Committees;
• to annually assess the effectiveness of the Board as a whole, the committees of the Board and for
assessing the contribution of each individual Director; and
• to examine the size of the Board with a view to determining the impact of the number upon
its effectiveness.
In year 2002, two meetings of the Nomination Committee were held whereby the Nomination
Committee approved the implementation of the ‘Guidelines for Recommending Candidates for Board
Appointments’ on 1 April 2002 and also the ‘Form of Evaluation of Board Effectiveness’ and the ‘Audit
Committee Self-Assessment Form’ on 17 December 2002.
(d) Compliance, Internal Control and Risk Policy Committee (CICR)
The primary responsibility of CICR is to monitor the Risk Management process within the Group and
the extent of compliance with the Statement of Internal Control requirements. The CICR provides
summary reports to the Board at regular intervals.
Statement on Corporate Governance
Puncak Niaga Holdings Berhad Annual Report 2002 72
(e) ESOS Option Committee
The ESOS Option Committee administers the Group’s Employees’ Share Option Scheme (ESOS
Scheme) which became effective on 25 February 2002. The ESOS Option Committee comprises the
following members:-
Chairman : YBhg Tan Sri Rozali Ismail (Executive Chairman)
Members : Encik Ruslan Hassan (Executive Vice Chairman)
Encik Mat Hairi Ismail (Executive Director, Finance)
Ir Lee Miang Koi (Executive Director, Project & Business Development)
Secretary : Madam Tan Bee Lian (Group Company Secretary)
The ESOS Option Committee met three times in year 2002 to approve the ESOS Option Committee’s
Term Sheet and Work Plan, to deliberate and approve on matters relating to the allocation of ESOS to
the eligible employees and to approve the issuance of the first and second tranches of ESOS to the
eligible employees.
(f) Management Committee
The Management Committee, headed by the Executive Vice Chairman, is made up of the Executive
Directors and Senior Management personnel of the Company. At its meetings, the Management
Committee reviews the performance of the Company and resolves operational as well as
inter-departmental issues. The Management Committee also reviews and comments on proposal papers
prior to tabling to the Board for approval.
The Management Committee meets at least once in every two months. In year 2002, the Management
Committee met eight times.
Directors’ Remuneration
(a) Level and Make Up of Remuneration
In recommending the remuneration for the Executive Directors, the Remuneration Committee aims to
give the Executive Directors every encouragement to enhance their’s and the Company’s performance
and to ensure that the Executive Directors are fairly but responsibly rewarded for their individual
contributions and performance.
The Remuneration Committee does not determine the remuneration of the Non-Executive Directors but
may make recommendation to the Board on the sum, if requested. The Non-Executive Directors’
remuneration is a matter to be determined by the Board as a whole. The fees paid to the individual
Non-Executive Directors are a fair reflection of the contribution which they make to the Company and the
time they spend attending to the Company’s affairs, for example, as members of the Board Committees.
In order to preserve their independence, the Non-Executive Directors do not participate in any Company
performance related or profit sharing scheme, pension fund or medical aid.
Puncak Niaga Holdings Berhad Annual Report 2002Puncak Niaga Holdings Berhad Annual Report 2002 73
(b) Procedure
The Remuneration Committee deliberates and recommends to the Board, the remuneration packages of the
Executive Directors. The Board, as a whole, determines the remuneration of the Non-Executive Directors.
During the Board’s deliberation on the respective Directors’ remuneration, the respective Directors
play no part in deciding their own remuneration and abstain from discussing or voting on their
own remuneration.
(c) Disclosure of Remuneration
The details of the remuneration of each Director of the Company during the financial year ended
31 December 2002 are as follows:-
Name of Directors Fees Salaries Bonuses Benefit- Allowance Employeesin-kind Provident
Fund
Tan Sri Rozali Ismail - - - - - -
Ruslan Hassan - - - - - -
Mat Hairi Ismail - - - - - -
Lee Miang Koi - - - - - -
Abdul Majid - - - - 109,406 -Abdul Karim
Dato’ Hari Narayanan - - - - 72,010 -Govindasamy
Dato’ Seri Dr Ting - - - - 79,010 -Chew Peh
Total - - - - 260,426 -
The remuneration packages of the Directors of the Group for the financial year ended 31 December
2002 with categorisation into the appropriate components are as follows:-
Remuneration Packages Executive Directors Independent Non-Executive(RM) Directors (RM)
Fees - -
Salaries 2,578,452 -
Bonuses 172,580 -
Benefits-in-kind 230,491 -
Allowance 708,860 260,426
Employees Provident Fund 428,145 -
Total 4,118,528 260,426
Statement on Corporate Governance
Puncak Niaga Holdings Berhad Annual Report 2002 74
On 26 February 2002, the Executive Directors were offered a total of 5.9 million new ordinary shares of the
Company under the ESOS Scheme. As at 31 December 2002, 360,000 options had been exercised by the
Executive Directors.
Directors’ Training
In year 2002, the Directors attended various seminars and courses to train and equip themselves to
effectively discharge their duties and to keep abreast with the latest developments in the legislations and
the water industry.
An in-house Induction Programme is arranged for newly appointed Directors to facilitate their
understanding of the Group’s business operations and corporate strategy. During the induction, the new
Directors are introduced to the Senior Management personnel of the Company. A Directors’ Manual is also
made available to the new Directors for their reference.
SHAREHOLDERS
Investor Relations
The Company’s Investor Relations Policy & Report is set out on pages 91 to 93 of the Annual Report.
Annual General Meeting (AGM)
The Company recognises the importance of maintaining effective bilateral communication with its
shareholders and uses the AGM as one of the platforms to achieve this purpose. All shareholders are
encouraged to attend the AGM and participate in the proceedings. They are given the opportunity to ask
questions relating to the Group’s performance and business activities and seek clarification on the
resolutions proposed.
ACCOUNTABILITY AND AUDIT
Financial Reporting
It is the Board’s responsibility to ensure that the financial statements of the Group and the Company give
a true and fair view of the state of affairs of the Group and the Company as required under Section 169(15)
of the Companies Act, 1965. Efforts are made to ensure that the financial statements comply with the
provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.
The Board also ensures that the quarterly and annual financial results are released to the Kuala Lumpur
Stock Exchange well within the stipulated time frame in order to provide timely and accurate information
to the investing public at large.
Puncak Niaga Holdings Berhad Annual Report 2002Puncak Niaga Holdings Berhad Annual Report 2002 75
Puncak Niaga Holdings Berhad Annual Report 2002 76
Statement of Directors’ Responsibility for Preparation of Financial Statements
The financial statements of the Group and Company have been drawn up in accordance with the applicable
approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The Directors
are responsible in ensuring that the financial statements give a true and fair view of the state of affairs of
the Group and Company at the end of the financial year and of the results and cash flows of the Group and
Company for the financial year.
In preparing the financial statements, the Directors have:-
• selected suitable accounting policies and applied them consistently;
• made judgements and estimates that are reasonable and prudent;
• ensured that all applicable accounting standards have been followed; and
• prepared financial statements on the going concern basis as the Directors have a reasonable expectation,
having made appropriate enquiries, that the Group and the Company have adequate resources to continue
in operational existence for the foreseeable future.
The Directors have the responsibility for ensuring that the Company keeps accounting records which
disclose with reasonable accuracy, the financial position of the Group and Company and which enables them
to ensure that financial statements comply with the Companies Act, 1965.
The Board has the overall responsibilities for taking all reasonable steps as are reasonably open to them to
safeguard the assets of the Group to prevent and detect frauds and other irregularities.
Relationship with Auditors
The Internal Auditors attend all Audit Committee Meetings. The external auditors are also invited to
attend the Audit Committee Meetings that deliberate on the Company’s quarterly and annual financial
results. During the Audit Committee Meetings, the external auditors highlighted observations made
during the course of audit to the Audit Committee.
The Company has always maintained a close and transparent professional relationship with the
external auditors.
Internal Control
The Statement on Internal Control is set out on pages 77 to 78 of the Annual Report.
Statement On Going Concern
Upon conducting due and reasonable enquiry into the affairs of the Company, the Board firmly believes that
the Company shall continue to operate as a going concern business in the foreseeable future.
Statement on Corporate Governance
INTRODUCTION
The Malaysian Code on Corporate Governance requires public listed companies to maintain a sound system
of internal control to safeguard shareholders’ investments and the Company’s assets. The Kuala Lumpur
Stock Exchange (KLSE) Listing Requirements requires Directors of public listed companies to include a
statement in their annual reports on the state of their internal controls.
RESPONSIBILITY
The Board of Puncak Niaga is responsible for maintaining a sound system of internal control and for
reviewing its adequacy and integrity so as to safeguard shareholders’ investments and the Group’s assets.
The Board and Management have implemented a control system designed to identify and manage risks
facing the Group in pursuit of its business objectives. This internal control system, by its nature, can only
provide reasonable and not absolute assurance against material misstatement or loss.
The Group has in place ongoing processes for identifying, evaluating, monitoring and managing significant
risks faced by the Group during the year. The Management is responsible for the identification and
evaluation of significant risks applicable to their respective areas of business and to formulate suitable
internal controls. This process is reviewed by the Board via a specific Board Committee, namely the
Compliance, Internal Control and Risk Policy Committee, which dedicates its time at periodic intervals
throughout the year for discussion on this matter.
RISK MANAGEMENT FRAMEWORK
Risk Management is firmly embedded in the Group’s Management system and is every employee’s
responsibility. In October 2001, the Board formally approved a systematic risk management structure
and process for the Group. Since then, the structure and process have been fully implemented by the
Management and employees of the Puncak Niaga Group. The Group’s risk management framework is
explained in detail in the Group’s Risk Management Policy & Report set out on pages 86 to 90 of the
Annual Report.
INTERNAL CONTROL SYSTEM
The key elements of the Group’s internal control system and assurance processes, inter alia, encompass the
following:-
• All major decisions require the final approval of the Board and are only made after appropriate in-depth
analysis. The Board receives regular and comprehensive information covering all Divisions and
Departments within the Group.
• All Departments and Divisions have clearly documented Procedures Manuals incorporating control
procedures and the scopes of responsibilities and authorities. The Procedures Manuals are updated
regularly depending on practical needs and to incorporate all elements necessitated by changes in the
Statement On Internal Control
Puncak Niaga Holdings Berhad Annual Report 2002 77
legislation, industry best practices and business dynamics. The latest revision in-line with the increase in
risk awareness being promulgated throughout the Group was completed in April 2002. The recent
update on the Procedures Manuals was carried out in March 2003.
• The Internal Audit Department independently reviews the control processes implemented by the
Management from time to time and periodically reports on its findings and recommendations to the Audit
Committee. The duties and responsibilities of the Audit Committee are detailed in the Terms of Reference
of the Audit Committee set out on pages 82 to 85 of the Annual Report. The Audit Committee, by
consideration of both Internal and External Audit Reports, is able to gauge the effectiveness and adequacy of
the internal control system, for presentation of its findings to the Board.
• The Compliance, Internal Control and Risk Policy Committee, which is chaired by YB Dato’ Seri
Dr Ting Chew Peh, an Independent Non-Executive Director was established in October 2001. This
Committee closely monitors the Risk Management process within the Group and the extent of
compliance with the Statement on Internal Control requirements.
• The Tender and Contracts Committee, which was set up in year 2000, ensures transparency and
competitive pricing in the award of contracts within the Group.
• Management Committee Meetings which are attended by all Executive Directors and Senior Management
are held bi-monthly to discuss and resolve, where necessary, on the Group’s operational matters.
• A detailed budgeting process has been established, requiring all Divisions and Departments to prepare
their respective budgets annually. These budgets are then reviewed and approved by the Board prior to
actual implementation each year. The monitoring of actual performance versus budget, with major
variances being followed up, is done on a monthly basis and management action is taken to tighten or to
rectify any shortcomings, where necessary.
Guidance for Directors of Public Listed Companies
The KLSE Task Force on Internal Control issued the ‘Statement on Internal Control: Guidance for Directors
of Public Listed Companies’ (Guidance) in December 2000. Based on the Guidance, the Group formulated a
comprehensive checklist to monitor its level of readiness on the Guidance. The Group aims to not just achieve
full compliance, but also to improve on the Group’s processes by implementing best business practices in line
with international best practice standards. Throughout the year 2002, the Compliance, Internal Control and
Risk Policy Committee has closely monitored the Group’s level of readiness with the Guidance.
This Statement on Internal Control has been prepared in accordance with the Guidance and has been reviewed
by the external auditors and subsequently approved by the Board of Puncak Niaga.
For and on behalf of the Board of Puncak Niaga Holdings Berhad,
Dato’ Seri Dr Ting Chew Peh
Chairman
Compliance, Internal Control and Risk Policy Committee
23 April 2003
Statement On Internal Control
Puncak Niaga Holdings Berhad Annual Report 2002 78
The Board of PNHB is pleased to present the Audit Committee Report for the financial year 2002.
1.Composition of the Audit Committee
The Audit Committee comprises the following:
Chairman: Encik Abdul Majid Abdul Karim (Independent Non-Executive Director)
Members : Encik Mat Hairi Ismail (Executive Director, Finance)
YBhg Dato’ Hari Narayanan Govindasamy (Independent Non-Executive Director)
YB Dato’ Seri Dr Ting Chew Peh (Independent Non-Executive Director)
Secretary : Madam Tan Bee Lian (Group Company Secretary)
2.Activities of the Audit Committee
In its effort to further enhance the effectiveness and quality of its internal audit function, the Audit
Committee has formally adopted the ‘Guidelines on Internal Audit Function’ which were issued in July
2002. The ‘Guidelines’ were prepared by a special taskforce set up with the guidance of the Securities
Commission and published in July 2002 to complement the KLSE Listing Requirements and the
Statement on Internal Control : Guidance for Directors of Public Listed Companies.
Activities undertaken by the Audit Committee during the financial year 2002 were:-
• review of the Annual Audit Plan with the external auditors on the scope of their audit including
audit procedures, significant accounting and auditing issues, impact of new or proposed changes in
accounting standards and regulatory requirements;
• review of the Internal Audit Department’s (IAD) Strategic Audit Plan to ensure sufficient coverage
was accorded to all high risk areas of the Group’s business and activities;
• monitored the implementation of IAD’s Annual Audit Plan and any changes thereto;
• review of the major findings reported by IAD and Management’s implementation of the recommended
corrective actions;
• assessed the manpower capacity of IAD to ascertain that the department was adequately manned by
appropriate employees with the right qualifications and experience to fulfil its responsibilities as a
corporate resource in support of the Audit Committee;
• evaluated the standards of internal controls of the Group and financial reporting by holding regular
discussions with Management on the overall adequacy of the Group’s Internal Control System;
• acted upon the directives of the Board to investigate and report on issues relating to the management
of the Group;
• reviewed the Group’s compliance with the relevant government regulations; and
• assessed the performance of the Group’s financial management.
3.Meetings of the Audit Committee
The Audit Committee met five times in the financial year 2002 and the details of the attendance of each
member of the Audit Committee are as per overleaf:-
Audit Committee Report
Puncak Niaga Holdings Berhad Annual Report 2002 79
Audit Designation Designation in No. of Meetings No. of PercentageCommittee in Audit PNHB held during Meetings %Member Committee the year attended
Encik Abdul Chairman Independent Non- 5 5 100Majid Abdul Executive DirectorKarim
Encik Mat Member Executive Director, 5 4 80Hairi Ismail Finance
YBhg Dato’ Member Independent Non- 5 3 60Hari Narayanan Executive DirectorGovindasamy
YB Dato’ Seri Member Independent Non- 5 5 100Dr Ting Executive DirectorChew Peh
During the Audit Committee Meetings, IAD tabled its internal audit reports to the Audit Committee for
deliberation and direction. Weaknesses of procedures were identified and the respective Heads of
Departments were asked to take the necessary actions to rectify those weaknesses and improve on proce-
dures and control mechanisms to prevent future occurrences of a similar nature.
The Audit Committee also invited the external auditors to present their findings in respect of the
Company’s audited annual financial results before the Audit Committee submitted its recommendation to
the Board for approval.
Minutes of the Audit Committee Meetings were distributed to all members of the Board for notation and
also tabled at the Board Meetings for further deliberation. At each Board Meeting, the Chairman of the
Audit Committee reported and highlighted to the Board, all findings discussed by the Audit Committee.
For year 2002, IAD initially planned its audit on departmental basis by reviewing the level of each
Department’s compliance with policy and procedures, statutory requirements, good industry practices, etc
and identifying risks, which were peculiar to the respective Departments under review. However, in the sec-
ond half of 2002, with the Audit Committee’s consent, IAD focused on the enterprise-wide risks i.e risks
that were identified during the brainstorming sessions of the Risk Management Scorecard Working Group
(comprising Executive Directors and Senior Management). The enterprise-wide risks identified are risks
facing the Group as a whole and the controls implemented to manage these risks are being managed by one
or more departments in the Company.
IAD played an important role in providing assurances to the Audit Committee and ultimately to the Board
of Directors as to whether effective controls were being implemented in the monitoring and mitigation of
the possible risk exposures affecting the Group.
Set out below are some recommendations and assurances provided by IAD for year 2002:-
1. Inventory and Storage System at the SSP2 Water Treatment Plant Storehouse.
2. Increasing Receivables.
3. Inadequate Raw Water Quantity and Poor Raw Water Quality.
Audit Committee Report
Puncak Niaga Holdings Berhad Annual Report 2002 80
Audit on Inventory and Storage System at the SSP2 Water Treatment Plant Storehouse
The scope and objective of the audit included evaluating the accuracy and completeness of the inventory
system through inventory verification to ascertain physical existence, storage system and recording system.
In addition, IAD also conducted the assessment of software controls, securities facilities and adherence to
established procedures.
Generally, IAD concluded that the storehouse was well maintained, tidy and clean. Management agreed to
look into ways to further enhance the current policies and procedures on the disaster recovery plan and other
areas affecting the SSP2 Water Treatment Plant Storehouse.
Audit on Increasing Receivables
The objectives and the scope of the review were to assess the extent of level of comfort that could be placed
on Management in controlling trade receivables. As at 31 May 2002, the short and long term trade receiv-
ables and the debt for the DSS2 project amounted to RM728 million, out of which RM195 million was
the balance outstanding for the DSS2 project. Average collection from January 2001 to May 2002 was
about 59% of the invoices billed.
It was observed that the trade receivables is on the increasing trend as PUAS is only able to make partial
settlement towards the monthly invoices raised by PNSB. Management is taking pro-active measures to
develop proposals to the Selangor State Government to resolve the huge outstanding receivables.
In general, IAD concluded that the billings, collection administration and records maintained by the
Finance & Accounts Department were addressed satisfactorily.
Audit on Inadequate Raw Water Quantity and Risk of Poor Raw Water Quality
IAD noted the controls that were in place to manage the risk of inadequate raw water quantity and the risk
of poor raw water quality. Dam Control Rules Curves have been developed to control the operation of
Sungai Langat Dam, Klang Gates Dam and Tasik Subang Dam respectively. The curves give the maxi-
mum abstraction rate to ensure supply is available on a sustainable basis. There were close monitoring
of rainfall pattern, weather, river flow and climatic changes. Environmental Impact Studies were car-
ried out for the whole catchment areas to identify existing activities and potential sources of pollution
and its effect on current and future water quality.
Environmental investigations were carried out to look into specific environmental issues such as plant shut-
downs, pollution, etc.
Detailed Sanitary Survey Reports were submitted to the Menteri Besar of Selangor, PUAS, Jabatan Alam
Sekitar Negeri Selangor and Jabatan Kesihatan Negeri Selangor for their further action.
To further enhance the quality of raw water, regular raw water samplings were conducted by PNSB and
an independent laboratory.
On public educational programmes, PNSB implemented the River Rescue Brigade, Education Outreach
Programme, visits to water treatment plants and participated in various exhibitions aimed at creating
public awareness on the importance of protecting our raw water sources.
Puncak Niaga Holdings Berhad Annual Report 2002 81
4.Terms of Reference of the Audit Committee
a. Composition
The Board shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board
of Directors), comprising of at least three (3) Directors where the majority of them should not be:-
i. Executive Directors of the Company or any related corporation;
ii. A spouse, parent, brother, sister, son or adopted son, daughter or adopted daughter of an Executive
Director of the Company or any related corporation; or
iii. Any person having a relationship which, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgement in carrying out the function of the Audit Committee.
The members of the Audit Committee shall elect a Chairman from amongst themselves who is not an
Executive Director or employee of the Company or any related corporation. It would be advantageous if
the Chairman possesses a strong personality, have knowledge and experience in financial reporting, good
leadership skills and is keen to get financial reporting and controls right.
All members of the Audit Committee, including the Chairman, will hold office only so long as they serve
as Directors of the Company. Should any member of the Audit Committee cease to be a Director of the
Company, his membership in the Audit Committee would cease forthwith.
It is desirable for membership on the Audit Committee to be rotated amongst all the Directors of the
Company such that each Director will serve a period of three (3) years on the Audit Committee.
If the members of the Audit Committee for any reason be reduced to below three (3), the Board of
Directors shall within three (3) months of that event, appoint such number of new members as may be
required to make up the minimum number of three (3) members.
b.Objectives
The primary objectives of the Audit Committee are to:-
i. Provide assistance to the Board in fulfilling its fiduciary responsibilities, particularly in the areas
relating to the Company’s accounting and management controls, financial reporting and business
ethics policies.
ii. Provide greater emphasis on the audit function by increasing the objectivity and independence of
external and internal auditors and providing a forum for discussion that is independent of
the Management.
iii. Maintain through regularly scheduled meetings a direct line of communication between the Board
and the external auditors, internal auditors and financial management.
iv. Strengthen the role of Non-Executive Directors by improving their knowledge and
understanding of the Company’s operation.
v. Undertake such additional duties as may be appropriate and necessary to assist the Board. However,
whether or not the Audit Committee should undertake one or more of the additional duties rests on
the Board’s viewpoint on corporate needs and the environment in which the Company operates.
Audit Committee Report
Puncak Niaga Holdings Berhad Annual Report 2002 82
c. Duties and Responsibilities
In fulfilling its primary objectives, the Audit Committee will need to undertake the following duties
and responsibilities:-
c.1 Oversee All Matters Relating to External and Internal Audits
i. Review the annual audit plan with the external auditors. The Committee shall meet with the external
auditors prior to the commencement of the annual audit to discuss:-
- The general outline of the extent and timing of the auditors’ proposed coverage of location such
as branches, departments, factories, divisions and subsidiaries.
- The nature of the audit procedures to be performed.
- The extent of any planned reliance on the work of the internal auditors and the anticipated effect
of this reliance on the examination.
- Any significant accounting and auditing problems that the auditors can foresee.
- The impact on the financial statements of any new or proposed changes in accounting standards
or regulatory requirements.
- The effect on the audit of significant data-processing systems.
Following review of the plan, the Audit Committee may request the external auditors to perform
additional audit work directed to specific areas of concern to the Committee.
ii. Oversee the internal audit department. The Audit Committee in overseeing the internal audit
department will:-
- Review the audit programme, scope, performance and findings of the internal auditors.
- Monitor the implementation of the programme so that sufficient internal audit coverage is accorded.
In this respect, only the Committee can consider and approve or otherwise, all requests by Senior
Management to utilise internal audit personnel for non-audit assignments.
- Assess the capacity of the internal audit department to fulfil its responsibilities by considering,
amongst other things, the scope of the department's authority as presented in the department's
charter, the qualifications and experience level of its staff, the degree to which internal auditors
are independent of the activities they audit and the reporting relationship between the head of
internal audit and Senior Management.
- To review the coordination of audit efforts between external and internal auditors, where practical,
with a view to maximising audit effectiveness and controlling external audit costs.
iii.Review the assistance and cooperation given by the Company's officers to the external and
internal auditors.
iv. To nominate the external auditors for appointment.
v. The external and/or internal auditors shall have the right to appear and be heard at any meeting of
the Audit Committee and shall appear before the Audit Committee when required to do so by the
Audit Committee.
Puncak Niaga Holdings Berhad Annual Report 2002 83
vi. Upon the request of the external and/or internal auditors, the Chairman of the Audit Committee
shall convene a meeting of the Committee to consider any matters the auditors believe should be
brought to the attention of the Committee.
c.2 Evaluate the Standards of Internal Control and Financial Reporting
i. Hold specific discussions with Senior Corporate Management to discuss the overall adequacy of
the internal control system.
ii. Meet with the internal and external auditors concerning their evaluation of the system of internal
accounting controls.
iii. Consider the nature and disposition of the relevant comments appearing in the reports
prepared by the internal auditors and in the external auditors’ management letter.
c.3 Review of Financial Statements
i. Meet with the Management and the external auditors to discuss the annual financial statements
of the Company or Group and the results of the audit before recommending approval by the Board.
ii. Review the nature and resolution of any significant accounting and auditing problems
encountered during the examination.
iii. It is good practice for the Audit Committee to meet the Management at a regular interval to
review the results of the Company or Group, such as quarterly review of the results.
iv. Review the nature of any related party transactions that may arise within the Company or Group.
v. Review the nature of any significant adjustments, reclassifications or additional disclosures
proposed by the external auditors that are currently significant or may become significant in the future.
vi. Review the adequacy of disclosure of the impact of any changes during the year in accounting
policies, standards and/or regulatory requirements.
vii. Review the reasons for the major fluctuations in financial statement balances for the current year
compared to prior years.
viii.Review for any unusual circumstances or situations reflected in the financial statements,
including identifying any marginal operations.
ix. Review the nature of any unusual or significant commitments or contingent liabilities.
x. Review of any significant differences between the annual report and other reports, such as reports
to the regulatory agencies.
xi. Review for any significant differences in format or disclosure from industry norms.
c.4 Additional Duties and Responsibilities
i. Act upon the Board of Directors’ request to investigate and report on any issues or concerns in
regard to the management of the Company.
ii. Review the Company’s business ethics code, the method of monitoring compliance with the code
and the disposition of reported exceptions.
iii. Review executive expenses.
iv. Review policies on sensitive payments.
Audit Committee Report
Puncak Niaga Holdings Berhad Annual Report 2002 84
v. Review compliance with certain government regulations.
vi. Review policies to avoid conflicts of interest and review past or proposed transactions between the
Company and members of the Management.
vii. Review certain aspects of the Company’s pension plan and compliance with relevant laws
and regulations.
viii.Assess the performance of financial management.
ix. Such other functions as may be agreed to by the Audit Committee and the Board of Directors.
d. Access to Records
In carrying out their duties and responsibilities, the Audit Committee will in principle have full, free
and unrestricted access to all Company records, property and personnel.
e. Meetings and Minutes
It is good practice for the Audit Committee to hold a minimum of four (4) meetings a year, although
additional meetings may be called at any time at the Chairman’s discretion. It would be desirable that
the notice of meetings be sent at least seven (7) days before the time set for the meeting together with
an agenda to all members of the Committee and any persons that may be required to attend. The
recommended quorum for each meeting shall be three (3) members.
In addition to the Committee members, the head of internal audit will normally be in attendance at
the meetings. Representatives of the external auditors are to be in attendance at meetings where
matters relating to the audit of the statutory accounts and/or the external auditors are to be discussed.
The Chief Executive Officer and/or other appropriate officers may be invited to attend, except for those
portions of the meetings where their presence is considered inappropriate, as determined by the
Committee Chairman.
Minutes of each meeting shall be kept and distributed to each member of the Committee and also to
the members of the Board. The Committee Chairman shall report on each meeting to the Board. The
Secretary to the Audit Committee shall be the Company Secretary.
Puncak Niaga Holdings Berhad Annual Report 2002 85
RISK MANAGEMENT POLICY
The Board has approved the following Group’s Risk Management Policy Statement:
"The Puncak Niaga Group’s Risk Management Policy is to identify, measure and control risks that may
prevent the Group from achieving its objectives.
Our challenge is to apply risk management to all parts of our business to ensure business risks are
minimised and opportunities enhanced.
We will achieve, maintain and review a proper risk management system. This commitment is driven
by the Board of Directors, which in turn is implemented by the Management and extends to all
employees of the Group.
This policy statement assigns responsibility for risk management to all Puncak Niaga Group employees and
acknowledges that corporate responsibility lies with the Board of Directors of the Puncak Niaga Group."
RISK MANAGEMENT REPORT
There are risks faced by all companies in the various facets of their corporate lives. The nature of such
risks including systemic, market, employees, economic, legislation, financial and others, need to be
identified and managed to reduce the possibility and impact of any adverse effects. Puncak Niaga
recognises this and has initiated risk management programmes to ensure its business risks are minimised
and opportunities enhanced.
The Board of Puncak Niaga established the following framework in October 2001, for the management of
the Group’s corporate risks:-
1. Group’s Risk Management Policy Statement.
2. Formation of the Compliance, Internal Control and Risk Policy Committee.
3. Terms of Reference of the Compliance, Internal Control and Risk Policy Committee.
4. Setting up of a Risk Management Section, which reports to the Compliance, Internal Control and Risk
Policy Committee.
As a follow-up from the Strategic Corporate Risk Management Workshop held for the Board and Senior
Management in August 2001, information on Risk Management has been fully disseminated to all
employees in the form of booklets, posters and through the Group’s internal communications network.
In addition, the risk management framework which was established in October 2001 has since then been
fully implemented by the Management and employees of Puncak Niaga.
Risk Management Policy & Report
Puncak Niaga Holdings Berhad Annual Report 2002 86
COMPLIANCE, INTERNAL CONTROL AND RISK POLICY COMMITTEE (CICR)
The establishment of the CICR was formalised by the Board in October 2001. The members of the CICR
comprise the following:-
Chairman : YB Dato’ Seri Dr Ting Chew Peh
(Independent Non-Executive Director)
Members : En Ruslan Hassan
Executive Vice Chairman
(Head of Compliance, Internal Control and Risk Policy Committee)
Mr Ng Wah Tar
General Manager, Finance and Accounts Department
En Sonari Solor
General Manager, Internal Audit Department
Madam Tan Bee Lian
Senior General Manager, Secretarial Department
Secretary : En Mohammed Sofian Ismail
Manager, Internal Audit Department
(Head of Risk Management Section)
There was no change in the membership of the CICR during the year 2002.
TERMS OF REFERENCE OF THE CICR
The CICR shall provide assistance to the Board of Directors of Puncak Niaga in discharging its fiduciary
responsibilities relating to safeguarding shareholders’ investment and the Group’s assets through a
structured approach to Risk Management. The primary responsibilities of the CICR are:-
• Formulating strategies to manage the overall risks associated with the Group’s activities. This entails
decisions on:-
º Long-term and short-term strategies.
º Justifiable capital allocation based on return per unit of risk.
• Recommending the appropriate risk management policies and procedures, which shall be reviewed
frequently to ensure consistency with fundamental changes in the economy, market conditions
and regulations.
• To periodically review the Group’s overall objectives by assessing the current risk portfolio composition
and determining the desired exposures of each major area of risk.
• To monitor and assess the risk portfolio composition of significant activities of the Group.
• To keep abreast of both current risk management techniques and theories, and any possible or actual
changes in the regulatory environment, and to recommend the appropriate action.
Puncak Niaga Holdings Berhad Annual Report 2002 87
CICR ACTIVITIES
Meetings held and attendance
During the year 2002, the CICR held five meetings and the attendance of the CICR members is as follows:-
(i) Meetings chaired by YB Dato’ Seri Dr Ting Chew Peh (Chairman of CICR)
Name Designation Designation in Meetings invited Meetings Percentagein Committee PNHB Group to attend attended %
YB Dato’ Seri Dr Chairman Independent Non– 3 3 100Ting Chew Peh Executive Director
Mr Ng Wah Tar Member General Manager 3 2 67
Encik Sonari Solor Member General Manager 3 3 100
Madam Tan Bee Lian Member Senior General 3 3 100Manager
Encik Mohammed Secretary Manager 3 3 100Sofian Ismail
(ii) Meetings chaired by Encik Ruslan Hassan (Head of CICR)
Name Designation Designation in Meetings invited Meetings Percentagein Committee PNHB Group to attend attended %
Encik Ruslan Hassan Head Executive Vice 2 2 100Chairman
Mr Ng Wah Tar Member General Manager 2 2 100
Encik Sonari Solor Member General Manager 2 2 100
Madam Tan Bee Lian Member Senior General 2 2 100Manager
Encik Mohammed Secretary Manager 2 2 100Sofian Ismail
At its meetings, the CICR reviewed in detail, the Status Reports prepared by the Risk Management
Section. The issues covered included the following:-
1. The level of readiness of the Group and the respective Divisions and Departments with regard to the
‘Statement on Internal Control’ requirements.
2. The progress of the risk assessment and risk monitoring exercises at Departmental, Divisional and
enterprise-wide levels.
3. The results of enterprise-wide risk audits carried out by the Internal Audit Department.
Risk Management Policy & Report
Puncak Niaga Holdings Berhad Annual Report 2002 88
4. The review to ascertain the effective utilisation of the Corporate Risk Scorecard software to identify,
measure and monitor all corporate risks identified within the Group.
5. Other relevant risk issues affecting the Group, from time to time.
RISK MANAGEMENT SCORECARD WORKING GROUP & ENTERPRISE-WIDE RISKS
The Group recognises that Risk Management involves a structured approach, combining the efforts of all
functions within the Group, to minimise the possibility and impact of unexpected damages so as to
contribute towards greater efficiency and better decision making. The Risk Management Scorecard
Working Group comprising all Executive Directors and the Heads of Departments held a total of 37
brainstorming sessions from October 2001 to April 2002 to comprehensively develop the Group’s Risk
Profile and to set up the various key controls and process requirements across all functions. These are
subsequently updated annually after taking into consideration the changing risk profiles as dictated by
changes in the business environment, strategies and functional activities of the Group from time to time.
The Group’s Risk Profile has been recently reassessed by the Risk Management Scorecard Working Group
in early 2003 in order to ensure that the Group’s Risk Profile is up-to-date.
DIVISIONAL AND DEPARTMENTAL RISKS
The respective Heads of Divisions/Departments are responsible for assessing and managing their
Divisional/Departmental risks. Using the Corporate Risk Scorecard software, the Heads of
Divisions/Departments have submitted their detailed risk scorecard reports to the Risk Management
Section on a regular basis. The first risk scorecard reports were finalised by all Divisions/Departments in
the first half of year 2002. These reports which documented the controls and processes for managing the
risks for purposes of assessing the effectiveness of the controls, were then subsequently updated quarterly,
i.e. as at 30 September 2002 and 31 December 2002 respectively.
CORPORATE RISK SCORECARD SOFTWARE
The Group invested in a risk management tool namely, the Corporate Risk Scorecard (CRS) software in
October 2001, to identify, measure and manage all corporate risks affecting the Group. The CRS software
offers a systematic approach to the management of enterprise-wide risks facing corporations. The CRS
software, inter alia, assists the Management of Puncak Niaga to successfully achieve their corporate
objectives. It was implemented at Enterprise and Divisional/Departmental levels within the Puncak Niaga
Group in October 2001 and was fully completed in April 2002.
The risk scorecard reports produced by the CRS software, incorporates the strategy, objectives, controls,
management action plans, gross and nett risk ratings.
In July 2002, the CRS software was further upgraded to Version 2, wherein a multitude of enhanced and
additional features were incorporated in the CRS software to facilitate more comprehensive Risk
Management techniques. With the upgrade to Version 2, the Group’s Risk Assessment function is now
linked to the compliance/audit aspect within the Enterprise-wide Risk Management Framework and
enables all key risk activities of the Group to be synchronised.
Puncak Niaga Holdings Berhad Annual Report 2002 89
Risk Management Policy & Report
Puncak Niaga Holdings Berhad Annual Report 2002 90
Compliance, Internal Control and Risk Policy Committee
Chairman – Independent Non-Executive Director
Head – Executive Vice Chairman
Define risk strategies and policies
Implement risk strategies
Risk Management Section
Section Head
Selected personnel totally involved in this activity
Full time support to Compliance, Internal Control and
Risk Policy Committee
Carry out day-to-day risk management function
BOARD
Compliance, Internal Control
& Risk Policy Committee
Board
Understand the risks affecting the Group
Ultimately responsible for managing risks
Ensure overall effectiveness of controls and risks
Approve risk management strategies and policies
Risk Management Scorecard Working Group
Heads of Departments and Directors
Brainstorms Risk Profile at Group level
Risk Management
Section
GROUP RISK MANAGEMENT ORGANISATION
INVESTOR RELATIONS POLICY
As a responsible corporate citizen, Puncak Niaga is totally
committed to upholding the highest standards of
transparency, accountability and integrity in the conduct of
our business activities in the best interest of our
shareholders as well as to allow potential investors to make
careful and informed investment decisions based on full and
transparent disclosure of information.
Puncak Niaga’s Investor Relations Policy aims to build
long-term relationships and credibility with our shareholders
and potential investors based on trust, honesty, openness,
transparency and sound understanding of the Company.
To achieve its objectives, the Company will endeavour to undertake the following:-
1.Creating Quality Dialogue• To create an environment where the effective bilateral communication between the Company and
our shareholders and investors both informs and educates through regular, open and transparent
provision of relevant and invaluable information over the long-term which will build mutually
beneficial long-term relationships vis-à-vis to foster a clearer understanding of the shareholders’
and investors’ expectations of the Company.
• To engage in quality dialogue with our shareholders and investors whereby the relationship is
based on the principles of honesty, openness and transparency and to foster mutual understanding
between the Company and our shareholders and investors.
• To reap the benefits of engaging in quality dialogue:-
º perception on our Company’s risk is reduced;
º enhance feedback of our Company’s performance;
º our Company’s share valuation becomes more realistic;
º develop confidence in our Management team and management style; and
º works as a guide in the evaluation of our Company’s business strategy.
2.Investor Communications Statement• To implement an efficient and effective Investor Relations Programme as part of our ongoing
shareholders’ and investors’ communication obligations.
• To provide high quality, meaningful and timely information over and above that is required by law
in order to improve the shareholders’ and investors’ understanding of our Company.
• To strive for key competence in the area of professional investor relations vide adequate resources
and capability.
• To earn the trust, respect and confidence of our existing shareholders and investors.
• To build and maintain long-term relationships with our existing shareholders and investors.
• To initiate long-term relationship building with potential shareholders and investors.
Our commitment to the above Policy is driven by the Board of Directors of Puncak Niaga Group and
implemented by the Management.
Investor Relations Policy & Report
Puncak Niaga Holdings Berhad Annual Report 2002 91
Investors Briefing on Puncak Niaga’s financial results
INVESTOR RELATIONS REPORT
The Company’s Investor Relations Policy, which is founded
on the Investor Communications Statement, provides the
framework for formulating the Company’s investor relations
activities and support infrastructure for investor relations.
The Investor Communications Policy is structured towards
improving the market’s perception and understanding of the
Company and its business.
In pursuit of building a long-term relationship with its
shareholders and institutional investors, the Board has set up
an Investor Relations Unit under the purview of the
Company’s Secretarial Department to maintain an open and
transparent channel of communication with the shareholders
and institutional investors. A dedicated e-mail address, [email protected] was set up in year
2002 for the purpose of facilitating open communication with the shareholders and investors as an avenue
for them to direct their enquiries. The Investor Relations Unit also maintains a record of the shareholders’
and investors’ e-mail addresses and updates them regularly on the Company’s latest developments. A
journal recording all forms of communication whether through mail, fax, e-mail or telephone is kept and
reviewed by the Group Company Secretary to ensure that all shareholders’ queries are recorded and attended
to promptly. During the reporting period, the Company received numerous queries including one from a
shareholder regarding the Put Option Date for the Company’s Redeemable Unconvertible Junior Notes
(RUN) and another from an overseas analyst regarding the Company’s capital structure. The Company also
regularly receives commendations from shareholders via its investor relations e-mail address. Mr Tan Lee
Seng wrote, “Thank you for sending us the write ups on Puncak Niaga Group” while Mr Tan Chong Suew
e-mailed “Thank you for keeping shareholders informed on the great achievement of the Company. Please
convey my heartfelt congratulations to the entire team. Keep up the great job”. These are just a couple of
excerpts from the e-mails received by the Company in year 2002.
In addition to the Annual Reports that are sent to the shareholders and the Quarterly Financial Results that
are announced to the Kuala Lumpur Stock Exchange (KLSE) for public release, the Company also makes
timely public announcements of corporate proposals and material information to the KLSE in accordance
with the Listing Requirements of the KLSE.
The Company’s general meetings is yet another forum for the Company to build its rapport and relationship
with its shareholders. Shareholders are encouraged to attend and participate at these meetings by raising
questions on the resolutions proposed and to enquire on the affairs of the Group. Our Senior Independent
Non-Executive Director, YB Dato’ Seri Dr Ting Chew Peh has also availed himself to attend to any queries
that the shareholders may have.
In year 2002, the Investor Relations Unit organised three analyst briefings and more than 50 dialogues were
held with various financial analysts, local and foreign research and investment houses as part of the
Company’s ongoing investor relations programme.
Investor Relations Policy & Report
Puncak Niaga Holdings Berhad Annual Report 2002 92
YBhg Datuk Azlan Zainol, Chief Executive Officer of EPFlistening attentively to the Company’s briefing
The Company was also invited to participate in the
Mayban Securities International Investors Conference
organised by Mayban Securities Sdn Bhd from 2 - 4
August 2002 at The Andaman Datai Bay, Langkawi. At
the conference, the Company gave a presentation on the
Company’s development and outlook.
During the KLSE Investors’ Week 2002 which was held at
the Exchange Square from 23 - 29 September 2002, the
Company took up two exhibition booths and gave a one-
hour Company presentation to approximately 80 analysts
and investors. In view of the encouraging response from
investors during the KLSE Investors’ Week, the Company
will continue to support the KLSE in this event in the coming
years for the following reasons:-
a) To further stimulate the interest of potential investors through an effective and direct dissemination
of information on the Group’s business activities, market position, revenue flows, management and
control structures of the Group;
b) To promote the Company’s corporate image to the public so as to create a distinction from its competitors
and to correct any public misconception arising from the Company’s business activities; and
c) To promote and stimulate growth in the Malaysian capital market.
Our employees who were involved in the KLSE Investors’ Week
2002 have also gained invaluable experience from the
interaction and communication with the investing public. In
gaining knowledge of the investors’ motivation and fears over
their investments in general and in PNHB in particular; has
helped the Company in the formulation of its strategies in
addressing all investor-related issues, whether real or imagined.
At the request of the Employees Provident Fund Board
(EPF), a major shareholder of the Company, a Company
briefing was arranged for seven senior representatives of
EPF on 25 November 2002 at the Company’s premises. The
EPF delegation was headed by its Chief Executive Officer,
YBhg Datuk Azlan Zainol.
The Company’s website, www.puncakniaga.com.my is accessible for our shareholders, investors and
members of the public to obtain information on the Company.
Shareholders, investors and the public are also encouraged to communicate any comments, feedbacks,
views, concerns and queries to the Company via our e-mail addresses, i.e [email protected]
(public enquiries) or [email protected] (investors’ enquiries), to enable us to further improve
on our level of operations and service to the community and to achieve our Vision as ‘The Leading And
Dynamic Integrated Water Services Company’.
Our Financial Advisor taking questions from the press andanalysts during the KLSE Investors’ Week 2002
Puncak Niaga Holdings Berhad Annual Report 2002 93
YBhg Tan Sri Rozali Ismail receiving a souvenir at theMayban Securities International Investors Conference
Puncak Niaga Holdings Berhad Annual Report 2002 94
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Puncak Niaga Holdings Berhad Annual Report 2002 95
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Ensuring Our Future
EnvironmentalPolicy & Report
MALAYSIA’S WATER SPECIALIST
EnvironmentalPolicy & Report
ENVIRONMENTAL POLICYPuncak Niaga, a water treatment specialist company, is committed to continuous improvements in
protecting the environment, minimising pollution, conserving natural resources and operating its facilities
in an environmentally sound manner.
In accordance with its Environmental Policy, the Company shall:-
1.Established an Environmental Management System
• sets objectives and targets for improvement of environmental performance;
• develop and implement programmes and activities in line with our Environmental Policy;
• emphasise the prevention of pollution in our activities; and
• develop and implement procedures to avoid and manage incidents which may have an adverse
environmental impact.
2.Compliance to Requirement
• fully comply with all applicable environmental laws, regulations and standards including the
National Standards and Malaysian Regulations and other requirements relevant to the water industry;
• establish an internal environmental control standard/system, where applicable, in order to comply
with the requirements; and
• to operate in a manner that provides for environmental specifications and sensitivity to the
environmental needs of the community, where practicable.
3.Monitoring and Controlling of Environmental Issues
• continuously monitor and control the environmental parameters for environmental performance
improvement;
• implement pollution reduction programmes where feasible to minimise the environmental impact from
hazardous materials, noise and wastewater; and
• develop and implement continuous programmes on the management of scheduled and non-scheduled
waste incorporating the 4R Concept, i.e. Refrain, Reuse, Recycle and Reduce.
4.Communication and Training
• communicate and create awareness of the Company’s Environmental Policy and environmental issues
amongst our employees, contractors, visitors and interested members of society; and
• encourage our employees in environmental initiatives and support them with training and awareness
programmes in environmental issues.
Puncak Niaga’s Environmental Policy shall be reviewed by Management from time to time for possible
revisions in light of changing conditions.
Clear water at Sungai Kancing,Taman Rimba
Clear water at Sungai Batang Kali
Rubbish dumping along Sungai Selangor, contributingto water pollution
ENVIRONMENTAL REPORT
The level of pollution in the waterways feeding the dams and water treatment plants significantly impacts
on our performance to produce water to the required Drinking Water Quality Standards stipulated by the
Ministry of Health. The various initiatives taken by us to safeguard the environment, not only benefits the
country as a whole, but also contributes to a better and healthier standard of living for our community,
through access to clean water.
Physical safeguards and water pollution monitoring procedures are in place to detect pollution before the
pollution load reaches the intake in the waterways. Even though we do not have the legislative powers to
stop polluters, our close cooperation with the Department of Environment (DOE), local enforcement
authorities, the Ministry of Health and other governmental agencies have assisted us to preserve the
environment and ensure the sustainability of our business activities.
The main causes of raw water pollution are accidental spillage of contaminants, illegal discharge or
dumping of raw sewage or chemicals and siltation due to indiscriminate land development. All these
factors regularly cause disruptions and hinder our operations at the water treatment plants.
Raw Water ViolationsBased on the monthly analysis carried out by a certified independent laboratory, there were 909 cases of
raw water quality violations in year 2002 (compared to 957 cases recorded in year 2001). This represents
a reduction of 5.02%.
Our vigilance in reporting violations to the authorities has helped in identifying sources of raw water
pollution leading to action being taken against some of the polluters. In year 2002, there were 175 cases
of plant shutdowns due to raw water pollution, mostly due to high turbidity and colour levels. With our
assistance, the DOE was able to trace the source of pollution and act against the polluters.
Several meetings were held between the DOE State of Selangor and the DOE State of Negeri Sembilan,
to discuss raw water pollution problems at the Sungai Labu catchment area leading to shutdowns at the
Earthworks activities at the banks of Sungai SelangorSoil erosion by the banks of Sungai Sembah
Salak Tinggi Water Treatment Plant. These meetings resulted in the formation of a joint watch
group involving both states to monitor the pollution load at the Sungai Labu catchment area.
Our Company’s toll free river watch line, 1800-88-3254, has been in operation since April
1997. It enables the public to report any incidences of pollution or to bring to the Company’s
attention, cases of parties polluting the waterways, such as indiscriminate dumping of
untreated waste, illegal sand mining activities, illegal logging activities and others.
Raw Water Quality Monitoring InitiativesWe are commited in discharging our responsibility to ensure that the treated water produced
from our water treatment plants are safe and of the highest quality. The quality of the raw water
at the intake and the treated water as it leaves the water treatment plants are monitored and
laboratory tested at frequent intervals, as follows:-
• Once every two hours daily, on a 24-hour basis against normal days quality standards of
three physical and six chemical parameters;
• Daily, for microbiological parameters and on a weekly basis by the Ministry of Health; and
• Monthly, for all parameters by an accredited independent laboratory according to the
schedules set by the Ministry of Health.
The quality of water is monitored at every stage of the process i.e. from the point of entry at
the intake of the water treatment plant, to the settled water and until it leaves the water
treatment plant at the balancing reservoir.
In addition to the above, we also adhere strictly to the following:-
• Water Quality Compliance monitoring is conducted to ensure the raw, settled and treated
water of the water treatment plants complies with the Standards set out in the Privatisation
Cum Concession Agreement (PCCA), Construction Cum Operation Agreement (CCOA) and
the Ministry of Health’s Drinking Water Quality Standards;
• Fluoride levels in the treated water are also monitored regularly and reports are submitted to
the Dentistry Office of the Ministry of Health; and
• Treated Water Compliance daily monitoring on minimum and maximum levels of
key parameters.
The Company conducts regular sanitary surveys to identify potential polluters of raw water sources
either jointly with the Ministry of Health or independently. A total of six sanitary surveys were
conducted in year 2002, bringing the total sanitary surveys conducted since year 1998 to 38.
Environmental impact investigations, which are preliminary forms of sanitary surveys,
continue to be carried out in year 2002. These investigations highlighted the following
sources of pollution:-
• Effluent discharges from industrial and inefficient sewage treatment plants;
• Domestic waste from local residential areas;
• Deforestation and earthworks contributing to surface run-off and soil erosion;
Monitoring the status of the watertreatment process
Water is regularly tested to ensureit complies with quality standards
River Gated Weir is used toregulate the river level forwater extraction
Sludge Thickening Tanks
Protective emergency response suits
• Leachate from illegal dumping sites;
• Agricultural and livestock farming activities; and
• Encroachment and recreation along the riverbanks and within the dam catchment areas.
The River Warning Monitoring System (RWMS) installed at Sungai Langat and Sungai Selangor
respectively continue to provide advance warning of possible raw water violations based on selected
physical and chemical parameters. The RWMS analyses water using standard methodologies of selected
parameters and gives prior warning to the water treatment plants of potential polluted raw water from the
rivers before it reaches the water treatment plant.
Dam Safety ManagementIn the area of dam safety management, we have implemented a programme to constantly survey and monitor
the dam area. The programme includes:-
• daily observation on the dams’ general area, structure and water quality;
• monthly visual inspection of dam areas, particularly along the dam embankments and upstream
tributaries. Should there be any abnormalities detected, environmental investigations will be carried out;
• monthly raw water pipeline and downstream river monitoring for any signs of structural faults,
contamination or encroachment;
• scheduled water quality sampling and analysis at selected stations within the dam areas and incoming
tributaries within the catchment areas; and
• inspection by an independent dam consultant at five-year intervals.
Sludge Treatment at Water Treatment PlantsThe water treatment plants taken over by us under the PCCA were not equipped with proper facilities for
sludge treatment. As such, we have proposed to the Selangor State Government to build sludge treatment
facilities at all of the 26 water treatment plants under the PCCA in stages. Perbadanan Urus Air Selangor
(PUAS) has been assigned to study and implement the proposal.
For the SSP2 Water Treatment Plant, four sludge lagoons were constructed at our own cost.
Similarly, for the Wangsa Maju Water Treatment Plant, a sludge treatment plant would also be
constructed at our own cost as our contribution towards environmental protection.
Chlorine Safety As chlorine is a major hazard to the environment, all water treatment plants have provided a specific
chemical building whereby exhaust fans are installed to operate automatically to disperse gas in minute
quantity upon the sensor detecting the presence of chlorine gas. However, should the chlorine gas
level exceed five milligrams per litre, the ventilation fans will automatically close and the chemical building
will be sealed to prevent the chlorine gas from escaping into the atmosphere.
The major water treatment plants have been installed with Chlorine Scrubber Systems. The system will be
activated automatically to neutralise any chlorine gas trapped in the chemical building in the event of
leakage before the neutralised gas is allowed to be discharged into the atmosphere.
EnvironmentalPolicy & Report
River Warning Monitoring System
In addition to the above safety arrangement, our selected employees have also been trained at the chlorine
manufacturer’s premises to handle chlorine leaks and they have been equipped with the necessary equipment.
Periodic drills are conducted under the Water Treatment Plant Emergency Response Plan and the
employees have been made to familiarise themselves with the action required of them, to investigate
and seal the leak should it occur.
ISO 14001:1996 Certification - Environmental Management System The Company’s business processes that may have environmental impact are constantly under review and,
where necessary, modified with the adoption of best practices in balancing environmental sensitivities. In
this connection, the SSP2 and Wangsa Maju Water Treatment Plants target to obtain the Environmental
Management System ISO 14001:1996 certification by May 2003 and December 2003 respectively.
Environmental Rejuvenation & ProtectionOur ongoing commitment to the preservation of the environment and natural habitat, is aptly
demonstrated in the beautification of the landscape surrounding the Bukit Gasing Pumping Station,
where an extensive tree planting and landscaping project was completed in year 2000. The exercise
resulted in the restoration of a large green lung area affected by the construction of a reservoir. This project
shall be the model for the reforestation and landscaping of sites affected by the Company’s future projects.
There are also extensive landscaping works at both the SSP2 and Wangsa Maju Water Treatment
Plants. They have become our showcase projects, demonstrating our commitment for technological innovations
in our development activities, made with a conscious effort at environmental preservation and conservation.
We are conscious of the possible environmental impact from our business activities. Research &
Development activities into design of water clarification processes using mechanical means instead of
chemicals are on-going. Efforts for development of optimal chemical dosing levels are made to reduce the
chemical loads in water. This will ensure the safest standards for water quality to not only safeguard the
consumer’s health but to also safeguard the riverine flora and fauna.
QCC Presentation on chemical dosage Reforestation at Bukit Gasing Pumping Station
River Rescue Brigade No. 9
Educational Outreach ProgrammeNo. 18
Educational Outreach ProgrammeNo. 21
The Company’s efforts in environmental protection are highlighted in the Company’s
in-house newsletter, KITA, which is circulated to all employees to raise their level of
awareness on rivercare and environmental protection and the impact of their work on
the environment.
Rivercare Awareness and Educational ProgrammesPuncak Niaga will continue to support all efforts by the Governmental and non-governmental
agencies towards the protection and conservation of the environment by participating in various
exhibitions and programmes aimed at creating public awareness on the importance of
protecting our water sources.
On our own, we have also been aggressively inculcating rivercare awareness and the
importance of environmental protection amongst school children through our River Rescue
Brigade and Educational Outreach Programmes. We have spent RM135,127.87 on both
programmes during the year 2002. The programmes have been designed to educate the
younger generation on the importance of potable water production and the effects and
prevention of river pollution. Activities include visits to the water treatment plants, river
cleaning projects, as well as theoretical education on the causes of pollution.
A bi-monthly newsletter entitled “DIDI Newsletter” is produced and distributed to
members of the River Rescue Brigade to keep them updated on current water issues. The
success of these programmes and activities has persuaded Puncak Niaga to extend its reach
by introducing the newsletter to a wider audience. There are also plans to set up a
“Perkhemahan Alam Sekitar” or Summer Camp for the River Rescue Brigade members.
Educational Outreach Programmes held in year 2002Programme Date VenueNo.18 2 April 2002 Sekolah Kebangsaan Pandan Indah, Ampang.
19 16 April 2002 Sekolah Rendah Jenis Kebangsaan (Cina) Yit Khwan,Tanjung Karang.
20 3 May 2002 Sekolah Kebangsaan Bandar, Banting.
21 12 June 2002 Sekolah Kebangsaan Seksyen 18, Shah Alam.
22 13 July 2002 Sekolah Kebangsaan Dato’ Abu Bakar Baginda,Sepang, Kajang.
23 30 July 2002 Sekolah Kebangsaan Kuala Selangor.
24 8 August 2002 Sekolah Kebangsaan Gombak Setia, Kuala Lumpur.
25 17 September 2002 Sekolah Rendah Jenis Kebangsaan Tamil Vivekananda,Petaling Jaya.
26 17 October 2002 Sekolah Kebangsaan Bukit Beruntung, Rawang.
27 6 November 2002 Sekolah Kebangsaan Klang.
THE FUTURE IS ALSO IN YOUR HANDS
Each and every one of us has a
part to play in ensuring our
future. Here are a few simple
steps we can take to save
water, prevent pollution and
help improve the quality of
our rivers and drinking water
in our daily routine.
1. Repair leaky taps and toilets as soon as you notice them -
help save up to 300 litres of water a day.
2. Turn off the tap while brushing your teeth, shaving and
washing the dishes - save 12-15 litres each time.
3. Run the washing machine and dishwasher only when they
are fully loaded - save between 1,500-2,500 litres of water
each month.
4. Recycle water when there may be another use for it - e.g. for
watering plants or garden.
5. Sweep off, instead of hosing, the driveway or patio - save
650 litres of water and prevent contaminants such as dirt,
motor oil, fertilisers and animal waste from flowing into
our rivers.
6. Install water-saving showerheads and high-performance,
low-flush toilets - save up to 90 litres a day per person, or up
to 75,000 litres of water a year per family of four.
7. Fix car leaks promptly - help prevent contaminants such as
motor oil and other fluids from flowing down our streets,
through the monsoon drains and into our rivers.
8. Water your lawn and garden only in the morning or evening -
water evaporates quickly during the middle of the day.
9. Report all significant water losses to the respective
authorities - e.g. broken pipes, open hydrants, etc.
10. Buy and use environmentally friendly products - choose safer,
multi-purpose cleansers marked with only a ‘Caution’
warning, rather than ‘Poison’ and ‘Danger’ on the label.
Remember, every drop counts. You can make a difference.
Puncak Niaga Holdings Berhad Annual Report 2002 96
It is the policy of Puncak Niaga to provide, so far as is practicable pursuant to Section 15 of the
Occupational Safety and Health Act, 1994 and all other relevant legislations, a safe and healthy working
environment for all its employees, and in the spirit of consultation and cooperation, the Management and
employees shall together strive to achieve the established goals and objectives of this policy.
Without prejudice to the generality of the above statement, the Organisational Safety & Health Policy of
Puncak Niaga is:-
• to provide and maintain a safe place and system of work;
• to ensure that all the employees are informed, instructed, trained and supervised on how to perform their
jobs safely and without risk to health;
• to investigate all accidents and near-misses and to take corrective measures to ensure that accidents or
near-misses will not recur;
• to comply with all legal requirements on safety and health as stipulated in the Occupational Safety and
Health Act, 1994, the regulations made under it and the approved codes of practices; and
• to review this policy as and when appropriate.
Organisational Safety & Health Policy
Safety Drill at Bukit Nanas Water Treatment Plant Safety talk conducted by Bomba dan Penyelamat Wilayah Persekutuanat Bukit Nanas Water Treatment Plant
Puncak Niaga Holdings Berhad Annual Report 2002 97
It is the policy of Puncak Niaga to provide quality services to fulfil its contractual obligations to the
Selangor State Government.
Puncak Niaga shall strive to consistently meet the quality standards pre-determined in the PCCA and
CCOA. Puncak Niaga is fully committed to perform all its obligations under the PCCA and CCOA with
full responsibility, due diligence and efficiency.
To Be The Leading And Dynamic Integrated Water Services Company, we shall adopt a quality
management system based on internationally recognised standards, which will ensure a planned,
systematic and proactive approach to quality in all aspects of our work.
Puncak Niaga’s quality management shall be characterised by:-
• proactiveness at all levels;
• the consistent application of ‘Right First Time Every Time’ principle;
• empowerment of employees to solve problems expeditiously; and
• a culture of continuous improvement and teamwork.
All employees shall share the responsibility to understand and diligently implement the Quality Policy.
Quality Policy
Water Treatment Plant employee at work Wangsa Maju Water Treatment Plant accredited with ISO 9002
Puncak Niaga Holdings Berhad Annual Report 2002 98
Newspaper Clippings
Puncak Niaga Holdings Berhad Annual Report 2002 99
Puncak Niaga Holdings Berhad Annual Report 2002 100
Newspaper Clippings
Puncak Niaga Holdings Berhad Annual Report 2002 101
Puncak Niaga Holdings Berhad Annual Report 2002 102
LivesEnriching the
We Touch
Puncak Niaga Holdings Berhad Annual Report 2002 103
The river is rich in itsusefulness. It cleanses,nourishes, transportsand generates growthwherever it flows.
Like the river, PuncakNiaga seeks to enrichthe lives we touchthrough our productsand services. As theleading water specialistin the country, we arecommitted to deliverthe best returns invalue to our customersand shareholders alike.
Distribution Schedule Of Equity Securities & Property
ORDINARY SHARES AS AT 29 APRIL 2003Authorised Capital : RM1,000,000,000
Issued and Paid-Up Capital : RM439,278,000
Nominal Value : RM1.00 per ordinary share
Holdings No. of Holders % of Holders Total Holdings % of Issued Capital
less than 1,000 459 4.26 150,024 0.03
1,000 - 10,000 8,948 83.08 27,762,968 6.32
10,001 - 100,000 1,149 10.67 31,550,192 7.18
100,001 - 21,963,899 (less than5% of issued capital) 211 1.96 209,657,346 47.73
21,963,900 (5% of issued capital)and above 3 0.03 170,156,750 38.74
TOTAL 10,770 100.00 439,278,000 100.00
30 Largest Shareholders As Per Record of Depositors No. of % of IssuedName of Shareholders Shares Held Capital
1.Amsec Nominees (Tempatan) Sdn Bhd 85,013,000 19.35
- AmFinance Berhad For Central Plus (M) Sdn Bhd
2.Central Plus (M) Sdn Bhd 47,564,000 10.83
3.Employees Provident Fund Board 37,579,750 8.55
4.AMMB Nominees (Tempatan) Sdn Bhd 17,026,000 3.88
- AmTrustee Berhad For Central Plus (M) Sdn Bhd (7/914-8)
5.RHB Capital Nominees (Tempatan) Sdn Bhd 16,000,000 3.64
- Pledged Securities Account For Central Plus (M) Sdn Bhd
(TSR 681055)
6.Central Plus (M) Sdn Bhd 11,723,000 2.67
7.CIMB Nominees (Tempatan) Sdn Bhd 8,720,000 1.99
- Commerce International Merchant Bankers Berhad
8.Malaysia Nominees (Tempatan) Sendirian Berhad 8,344,500 1.90
- Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
9.Bank Kerjasama Rakyat Malaysia Berhad 7,000,000 1.59
- Pledged Securities Account For Kumpulan Darul Ehsan Berhad
10. AmFinance Berhad 6,523,750 1.49
- Pledged Securities Account For Central Plus (M) Sdn Bhd
11. Corporate Line (M) Sdn Bhd 6,134,750 1.40
12. HLG Nominee (Tempatan) Sdn Bhd 5,023,250 1.14
- PB Trustee Services Berhad For HLG Growth Fund
Puncak Niaga Holdings Berhad Annual Report 2002 104
30 Largest Shareholders As Per Record of Depositors No. of % of Issued
Name of Shareholders (continued) Shares Held Capital
13. Malaysian Assurance Alliance Berhad 5,000,000 1.14
14. Mayban Nominees (Tempatan) Sdn Bhd 4,197,000 0.96
- Mayban Trustees Berhad For Affin Equity Fund (930090)
15. Amanah Raya Nominees (Tempatan) Sdn Bhd 4,000,000 0.91
- Amanah Saham Malaysia
16. Malaysia Nominees (Tempatan) Sendirian Berhad 3,600,000 0.82
- Pledged Securities Account For Kumpulan Perangsang
Selangor Bhd (01-00058-000)
17. Kumpulan Wang Amanah Pencen 3,500,000 0.80
18. Universal Trustee (Malaysia) Berhad 3,343,000 0.76
- CMS Premier Fund
19. Amanah Raya Nominees (Tempatan) Sdn Bhd 3,238,750 0.74
- Amanah Saham Wawasan 2020
20. AllianceGroup Nominees (Tempatan) Sdn Bhd 3,000,000 0.68
- Alliance Merchant Nominees (Tempatan) Sdn Bhd For
Kumpulan Darul Ehsan Berhad
21. Malaysia National Insurance Berhad 2,619,750 0.60
22. AMMB Nominees (Tempatan) Sdn Bhd 2,514,000 0.57
- AmTrustee Berhad For HLG Penny Stock Fund (5/4-3)
23. Amanah Raya Nominees (Tempatan) Sdn Bhd 2,448,250 0.56
- Sekim Amanah Saham Nasional
24. Malaysia Nominees (Tempatan) Sendirian Berhad 2,395,000 0.55
- Great Eastern Life Assurance (Malaysia) Berhad (Par 2)
25. AMMB Nominees (Tempatan) Sdn Bhd 2,345,000 0.53
- AmTrustee Berhad For BHLB Pacific Dana Al-Ihsan (5/2-7)
26. Universal Trustee (Malaysia) Berhad 2,307,000 0.53
- BHLB Pacific High Growth Fund
27. Malaysia Nominees (Tempatan) Sendirian Berhad 2,300,000 0.52
- Amanah SSCM Asset Management Berhad For Amanah
Smallcap Fund Berhad (JM730)
28. Universal Trustee (Malaysia) Berhad 2,298,000 0.52
- BHLB Pacific Emerging Companies Growth Fund
29. AMMB Nominees (Tempatan) Sdn Bhd 2,250,000 0.51
- MIDF Aberdeen Asset Management Sdn Bhd For Employees
Provident Fund (7/836-2)
30. AmFinance Berhad 2,033,000 0.46
- Pledged Securities Account For Fang Kok Leong @ Phang Soon Fook (SMART)
TOTAL 310,040,750 70.58
Puncak Niaga Holdings Berhad Annual Report 2002 105
Distribution Schedule Of Equity Securities & Property
Puncak Niaga Holdings Berhad Annual Report 2002 106
Directors’ Interests in Ordinary Shares As Per Register of Directors’ Shareholdings
No. Of Shares Held In The CompanyDirect Interest % Deemed Interest %
1 YBhg Tan Sri Rozali Ismail 330,000 0.07 190,051,0001
43.26
2 Encik Ruslan Hassan 394,000 0.09 202,5002
0.05
3 Encik Mat Hairi Ismail 22,750 0.01 209,5002
0.05
4 Ir Lee Miang Koi 144,000 0.03 20,0003
0.005
5 Encik Abdul Majid Abdul Karim 3,000 0.001 - -
6 YBhg Dato’ Hari NarayananGovindasamy - - 210,000
40.05
7 YB Dato’ Seri Dr Ting - - - -Chew Peh
1 Deemed interest by virtue of 50% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively
2 Held in nominee name, CIMSEC Nominees (Tempatan) Sdn Bhd
3 Held in nominee name, Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd
4 Held in nominee name, Mayfin Nominees (Tempatan) Sdn Bhd
List of Substantial Shareholders As Per Register of Substantial Shareholders (excluding bare trustees)
No. Of Shares Held In The CompanyDirect Interest % Deemed Interest %
1 YBhg Tan Sri Rozali Ismail 330,000 0.07 190,051,0001
43.26
2 Encik Shaari Ismail - - 190,051,0001
43.26
3 Central Plus (M) Sdn Bhd 59,304,500 13.50 124,562,7502
28.36
4 Employees Provident Fund Board 37,579,750 8.55 3,630,0003
0.83
1 Deemed interest by virtue of 50% equity interest each in Central Plus (M) Sdn Bhd and Corporate Line (M) Sdn Bhd respectively
2 Held in various nominee names
3 Shares held and managed by various Portfolio Managers
No. Name
No. Name
Puncak Niaga Holdings Berhad Annual Report 2002 107
WARRANTS AS AT 29 APRIL 2003
Holdings No. of Holders % of Holders Total Holdings % of Warrants
Issued
less than 1,000 711 14.00 344,750 0.32
1,000 - 10,000 3,752 73.90 10,710,538 9.79
10,001 - 100,000 540 10.64 16,091,233 14.71
100,001 - 5,468,742 (less than 5% of warrants issued) 72 1.42 25,234,099 23.07
5,468,743 (5% of warrants issued) and above 2 0.04 56,994,249 52.11
TOTAL 5,077 100.00 109,374,869 100.00
30 Largest Warrant Holders As Per Record of Depositors No. of Warrants % of Warrants
Name of Warrant Holders Held Issued
1.Rozali Bin Ismail 51,466,812 47.06
2.Employees Provident Fund Board 5,527,437 5.05
3.AmFinance Berhad 2,047,000 1.87
- Pledged Securities Account For Fang Kok Leong @ Phang Sook Fook (SMART)
4.Malaysia Nominees (Tempatan) Sendirian Berhad 1,971,600 1.80
- Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
5.Bank Kerjasama Rakyat Malaysia Berhad 1,750,000 1.60
- Pledged Securities Account For Kumpulan Darul Ehsan Berhad
6.Corporate Line (M) Sdn Bhd 1,533,687 1.40
7.HLG Nominee (Tempatan) Sdn Bhd 1,255,812 1.15
- PB Trustee Services Berhad for HLG Growth Fund
8.Fang Kok Leong @ Phang Soon Fook 1,103,000 1.01
9.Universal Trustee (Malaysia) Berhad 1,000,000 0.91
- TA Islamic Fund
10. BHLB Trustee Berhad 875,000 0.80
- TA Comet Fund
11. Lau Wai Fong 735,000 0.67
12. Malaysia Nominees (Tempatan) Sendirian Berhad 575,000 0.53
- Amanah SSCM Asset Management Berhad for Amanah
Smallcap Fund Berhad (JM730)
13. Cheong Pang Kwan 572,000 0.52
14. Wong Lee Yun 550,000 0.50
Distribution Schedule Of Equity Securities & Property
30 Largest Warrant Holders As Per Record of Depositors No. of Warrants % of Warrants
Name of Warrant Holders (continued) Held Issued
15. Malaysia Nominees (Tempatan) Sendirian Berhad 454,000 0.42
- Great Eastern Life Assurance (Malaysia) Berhad (Par 2)
16. HSBC Nominees (Tempatan) Sdn Bhd 436,600 0.40
- HSBC (M) Trustee Bhd for Amcumulative Growth (3639)
17. Universal Trustee (Malaysia) Berhad 374,000 0.34
- Alliance First Fund
18. Mak Ngia Ngia @ Mak Yoke Lum 357,000 0.33
19. Lembaga Tabung Angkatan Tentera 343,750 0.31
20. Teo Kin Swee 312,000 0.29
21. OSK Nominees (Asing) Sdn Berhad 292,000 0.27
- Pledged Securities Account For Tan Boon Chiang
22. Southern Investment Bank Berhad 286,000 0.26
- Employee’s Provident Fund
23. Mayban Nominees (Tempatan) Sdn Bhd 268,000 0.25
- Pledged Securities Account For Fong Swee Eng (318AC0001)
24. Mayban Nominees (Tempatan) Sdn Bhd 266,000 0.24
- Pledged Securities Account For Su Tiing Uh (178AW0603)
25. Amanah Raya Nominees (Tempatan) Sdn Bhd 238,000 0.22
- AUTB Progress Fund
26. Malaysia Nominees (Tempatan) Sendirian Berhad 237,400 0.22
- Great Eastern Life Assurance (Malaysia) Berhad (Non Par 1)
27. Tan Seng Kow 237,000 0.22
28. Wong Kok Hou 230,000 0.21
29. Asia Life (M) Berhad 223,500 0.20
- As Beneficial Owner (M’sia Life Fund)
30. Tasec Nominees (Tempatan) Sdn Bhd 220,000 0.20
- TA Asset Management Sdn Bhd For Yayasan Sabah (YS)
TOTAL 75,737,598 69.25
Puncak Niaga Holdings Berhad Annual Report 2002 108
No. Name
Puncak Niaga Holdings Berhad Annual Report 2002 109
Directors’ Interests In Warrants As Per Register Of Directors’ Warrantholdings
No. Of Warrants Held In The CompanyDirect Interest % Deemed Interest %
1 YBhg Tan Sri Rozali Ismail 51,466,812 47.06 1,545,9371
1.41
2 Encik Ruslan Hassan 41,625 0.04 - -
3 Encik Mat Hairi Ismail 52,375 0.05 - -
4 Ir Lee Miang Koi 18,000 0.02 - -
5 Encik Abdul Majid Abdul Karim - - - -
6 YBhg Dato’ Hari Narayanan Govindasamy - - 52,500
20.05
7 YB Dato’ Seri Dr Ting Chew Peh - - - -
1 Deemed interest by virtue of 50% equity interest in Corporate Line (M) Sdn Bhd
2 Held in nominee name, Mayfin Nominees (Tempatan) Sdn Bhd
LIST OF PROPERTY AS AT 31 DECEMBER 2002
RemaningLeasehold Period
Description & Date of Land Area Net Book (Expiry ExistingLocation Acquisition Value Tenure Date) use
Vacant Land 14/2/1998 10,364 sq.m. RM8,283,525 99 years 97 years noneH.S.(D) 142037 Leasehold expiring on PT 32, Section 14 17/12/2099 Bandar Shah Alam District of Petaling Selangor
Director’s Reportfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 110
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Puncak Niaga Holdings Berhad Annual Report 2002 111
Financial
ReportsDirectors’ Report
Consolidated Income Statement
Company Income Statement
Balance Sheets
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Report of the Auditors
112-119
120
120
121
122
122
123-124
125-157
158
158
159
Directors’ Reportfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 112
The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the
Company for the financial year ended 31 December 2002.
Principal activities
The Group is principally engaged in the operation, maintenance, management, construction and rehabilitation of water
treatment facilities. The principal activities of the Company during the financial year are that of investment holding and
provision of management services. The principal activities of the subsidiaries are set out in Note 13 to the financial statements.
There has been no significant change in the nature of the activities of the Group and of the Company during the financial year.
Financial Results Group CompanyRM RM
Profit after taxation 179,745,431 1,870,146
Dividends
No dividends have been paid or declared by the Company since 31 December 2001. The Directors do not recommend the
payment of any dividend for the financial year ended 31 December 2002.
Reserves and provisions
Material transfers to and from reserves during the financial year are disclosed in the Statement of Changes in Equity. There
were no material transfers to or from provisions during the financial year.
Share capital
During the financial year, the issued and fully paid up capital of the Company increased from RM437,500,000 to
RM439,278,000 by way of the issuance of 1,778,000 new ordinary shares of RM1.00 each for cash as follows:
Purpose of issue No. of ordinary shares of RM1.00 each
Exercise of share options by eligible employees pursuant to the Employees’ Share Option Scheme 1,778,000
The above new ordinary shares issued during the financial year ranked pari-passu in all respects with the existing ordinary
shares of the Company.
Employees’ Share Option Scheme
The Company’s Employees’ Share Option Scheme (‘ESOS’), governed by the ESOS Bye-Laws, was principally approved by the
shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001 and became effective following the
implementation by the Company on 25 February 2002. The ESOS shall be in forced for a duration of five (5) years
commencing from 25 February 2002.
Puncak Niaga Holdings Berhad Annual Report 2002 113
Employees’ Share Option Scheme (continued)
The salient features of the ESOS are as follows:
(a) The ESOS is set up for the participation in ordinary shares of the Company only. The maximum number of new ordinary
shares which may be made available under the ESOS shall not exceed 10% of the total issued and paid up ordinary shares
of the Company at the point in time when an offer is made. At the commencement of the ESOS, the total number of new
ordinary shares available for offer was 43,750,000 ordinary shares of RM1.00 each.
(b) Eligible employees are those who have been in service of the Group for a continuous period of at least one (1) year
including full time Executive Directors who are involved in the day-to-day management and on the payroll of the Group.
(c) The ESOS is administered by the Option Committee which comprise the Executive Directors of the Company.
(d) The options granted under the ESOS may be exercised by the grantee by notice in writing to the Company during the
period commencing from the date of offer and before the expiry of the ESOS on 24 February 2007.
(e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of
RM1.00 each in the Company under the ESOS is the weighted average market price of the shares of the Company as
quoted in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) market days immediately
preceding the respective dates of offer subject to a discount of not more than 10%, or at the par value of the ordinary
shares of the Company of RM1.00 each, whichever is higher.
(f) The eligible employee to whom the options have been granted has no right to participate, by virtue of the options, in any
share issue of any other company.
(g) The new ordinary shares issued arising from the ESOS shall rank pari-passu in all respects with the then existing ordinary
shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or other
distributions, the entitlement date of which is prior to the date of allotment of the said new ordinary shares.
(h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 2007, in accordance with
the Directors’ approval is as follows:
Number of options granted and Percentage of options exercisableTranche unexercised as at 31 December 2002 2003 2004 2005 2006 2007*
% % % % %
1 30,524,000 45 71 90 100 100
2 2,843,000 49 71 92 100 100
33,367,000
* The ESOS expires on 24 February 2007
Directors’ Reportfor the financial year ended 31 December 2002
Employees’ Share Option Scheme (continued)
(i) The movements of the options over the ordinary shares of RM1.00 each of the Company granted under the ESOS during
the financial year are as follows:
Exercise Number of share optionsDate of options price At
Tranche granted per option Granted Exercised Lapsed** 31.12. 2002
1 26.2.2002 RM2.37 33,422,000 (1,778,000) (1,120,000) 30,524,000
2 26.8.2002 RM2.47 2,933,000 0 (90,000) 2,843,000
36,355,000 (1,778,000) (1,210,000) 33,367,000
** Due to resignations or offers not taken up
(j) The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the full list
of option holders and their holdings, except for eligible employees (excluding Executive Directors) with option allocation
of 250,000 options and above, which are as follows:
Number of options over ordinary shares of RM1.00 eachAt date of At
Name of eligible employees offer/granted Exercised Lapsed* 31.12.2002
Nik Nazman bin Husin 500,000 0 0 500,000
Beh Men Huat 350,000 0 (350,000) 0
Ibrahim bin Ismail 350,000 0 0 350,000
Loh Kit Mun 350,000 0 0 350,000
Azlan bin Hamid 300,000 0 0 300,000
Ramalingam a/l K.R. Arumugam 300,000 0 0 300,000
Sonari bin Solor 300,000 (30,000) 0 270,000
Syed Danial bin Syed Ariffin 300,000 0 0 300,000
Tan Bee Lian 300,000 0 0 300,000
Chan Siew Meei 250,000 (8,000) 0 242,000
Ismail bin Maidin 250,000 0 0 250,000
Mohd Sabaruldin bin Che Bakar 250,000 0 0 250,000
* Due to resignation
Puncak Niaga Holdings Berhad Annual Report 2002 114
Directors
The Directors who have held office during the period since the date of the last report are:
Tan Sri Rozali bin Ismail
Ruslan bin Hassan
Mat Hairi bin Ismail
Lee Miang Koi
Abdul Majid bin Abdul Karim
Dato’ Hari Narayanan a/l Govindasamy
Dato’ Seri Dr. Ting Chew Peh
In accordance with Article 98 of the Company’s Articles of Association, Mat Hairi bin Ismail and Dato’ Hari Narayanan a/l
Govindasamy retire from office by rotation at the forthcoming Annual General Meeting and, being eligible and upon the
recommendation of the Nomination Committee, offer themselves for re-election.
Directors' interests
According to the Register of Directors’ Shareholdings, particulars of interests in shares, notes, warrants and options in the
Company and its related corporations during the financial year of those Directors holding office at the end of the financial year
are as follows:
Number of ordinary shares of RM1.00 eachAt Transfer At
1.1.2002 Acquired Sold from/(to) 31.12.2002
Direct interests in the Company:
Tan Sri Rozali bin Ismail 0 330,000 0 0 330,000
Ruslan bin Hassan 364,000 30,000 0 0 394,000
Mat Hairi bin Ismail 22,750 0 0 0 22,750
Lee Miang Koi 144,000 0 0 0 144,000
Abdul Majid bin Abdul Karim 3,000 0 0 0 3,000
Indirect interests in the Company:
Tan Sri Rozali bin Ismail 212,251,000 0 (22,200,000) 0 190,051,000
Ruslan bin Hassan 202,500 0 0 0 202,500
Mat Hairi bin Ismail 209,500 0 0 0 209,500
Lee Miang Koi 20,000 0 0 0 20,000
Dato’ Hari Narayanan a/l Govindasamy 210,000 0 0 0 210,000
(* deemed interest by virtue of 50% shareholding interest in both Central Plus (M) Sdn. Bhd., a substantial corporate
shareholder, and in Corporate Line (M) Sdn. Bhd., a corporate shareholder of the Company)
(^^ held by nominees)
Puncak Niaga Holdings Berhad Annual Report 2002 115
*
^^
^^
^^
^^
Directors’ Reportfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 116
Directors' interests (continued)
Redeemable Unconvertible Junior Notes in RMAt Transfer At
1.1.2002 Acquired Sold from/(to) 31.12.2002
Direct interests in the Company:
Ruslan bin Hassan 708,125 0 0 0 708,125
Mat Hairi bin Ismail 261,875 0 0 0 261,875
Lee Miang Koi 245,000 0 0 0 245,000
Indirect interests in the Company:
Tan Sri Rozali bin Ismail 20,608,891 0 0 0 20,608,891
Dato’ Hari Narayanan a/l Govindasamy 262,500 0 0 0 262,500
Number of warrantsAt Transfer At
1.1.2002 Acquired Sold from/(to) 31.12.2002
Direct interests in the Company:
Tan Sri Rozali bin Ismail 51,516,812 0 (50,000) 0 51,466,812
Ruslan bin Hassan 141,625 0 (100,000) 0 41,625
Mat Hairi bin Ismail 52,375 0 0 0 52,375
Lee Miang Koi 49,000 0 (31,000) 0 18,000
Indirect interests in the Company:
Tan Sri Rozali bin Ismail 1,545,937 0 0 0 1,545,937
Dato’ Hari Narayanan a/l Govindasamy 52,500 0 0 0 52,500
Number of options over ordinary shares of RM1.00 eachAt date of At
offer/granted Exercised Lapsed 31.12.2002
Direct interests in the Company:
Tan Sri Rozali bin Ismail 2,500,000 (330,000) 0 2,170,000
Ruslan bin Hassan 1,700,000 (30,000) 0 1,670,000
Mat Hairi bin Ismail 850,000 0 0 850,000
Lee Miang Koi 850,000 0 0 850,000
(** held by nominee and deemed interest by virtue of 50% shareholding interest in Corporate Line (M) Sdn. Bhd.)
(^ deemed interest by virtue of 50% shareholding interest in Corporate Line (M) Sdn. Bhd.)
(^^ held by nominees)
**
^^
^
^^
Puncak Niaga Holdings Berhad Annual Report 2002 117
Directors' interests (continued)
By virtue of his substantial interests in shares of Central Plus (M) Sdn. Bhd. (‘CPMSB’), a substantial corporate shareholder
of the Company, Tan Sri Rozali bin Ismail is deemed to have an interest in the shares of the Company and all its subsidiaries
and associate to the extent CPMSB has an interest.
Number of ordinary shares of RM1.00 eachAt At
1.1.2002 Acquired Sold 31.12.2002
Deemed interest in the Company:
Tan Sri Rozali bin Ismail 206,067,250 0 (22,200,000) 183,867,250
The other Director in office at the end of the financial year did not hold any interest in shares, notes, warrants or options in
the Company or its related corporations.
Directors' benefits
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or
objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the
Company or any other body corporate other than the options over the shares granted by the Company to eligible employees
and Executive Directors of the Company and its subsidiaries pursuant to the Company’s ESOS mentioned above.
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit
(other than the Directors' remuneration and benefits as disclosed in Note 7 to the financial statements) by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company
in which he has a substantial financial interest, except for:
(i) certain Directors who received remuneration as Directors/Executive Directors of related corporations;
(ii) Tan Sri Rozali bin Ismail who has deemed interests in a related party, Mandai Sari Sdn. Bhd., which undertakes to operate,
maintain and manage the water treatment facilities under the terms of the Operation and Maintenance Agreement dated
8 October 1994 with Puncak Niaga (M) Sdn. Bhd. (‘PNSB’), a wholly-owned subsidiary; and
(iii) Tan Sri Rozali bin Ismail who has deemed interests in a related party, RZ Management Services Sdn. Bhd. which provides
corporate secretarial services to the Group.
Statutory information on the financial statements
Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took
reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for
doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had
been made for doubtful debts; and
Directors’ Reportfor the financial year ended 31 December 2002
Statutory information on the financial statements (continued)
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their
values as shown in the accounting records of the Group and of the Company had been written down to an amount which
they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the
financial statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company
misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months
after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the
Group and of the Company to meet their obligations when they fall due.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures
the liability of any other person; or
(b) any contingent liability of the Group or of the Company which has arisen since the end of the financial year except as
disclosed in Note 37 to the financial statements.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the
financial statements which would render any amount stated in the financial statements misleading.
In the opinion of the Directors,
(a) the results of the Group's and of the Company’s operations during the financial year were not substantially affected by
any item, transaction or event of a material and unusual nature; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of
the Company for the financial year in which this report is made.
Puncak Niaga Holdings Berhad Annual Report 2002 118
Significant events during the financial year
The significant event that occurred during the financial year are disclosed in Note 36 to the financial statements.
Significant event subsequent to the financial year balance sheet date
The significant event that occurred subsequent to balance sheet date is disclosed in Note 37 to the financial statements.
Ultimate holding company
The Company has no corporate shareholder being regarded by the Directors of the Company as the ultimate holding company
nor as the holding company.
Auditors
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with their resolution dated 23 April 2003.
Tan Sri Rozali bin Ismail
Director
Mat Hairi bin Ismail
Director
Kuala Lumpur
Puncak Niaga Holdings Berhad Annual Report 2002 119
Puncak Niaga Holdings Berhad Annual Report 2002 120
Consolidated Income Statementfor the financial year ended 31 December 2002
The notes on pages 125 to 157 form an integral part of these financial statements.
Group 2002 2001
Note RM RM
Revenue 6 565,105,110 552,336,942
Other operating income 14,416,902 11,514,068
Operating and maintenance cost (113,801,833) (126,318,650)
Staff cost (26,878,109) (25,754,925)
Administrative expenses (21,589,129) (20,412,047)
Depreciation and amortisation expenses (101,087,863) (98,694,027)
Profit from operations 7 316,165,078 292,671,361
Finance cost 8 (136,051,435) (112,982,535)
Profit from ordinary activities before taxation 180,113,643 179,688,826
Taxation 9 (368,212) (374,770)
Net profit for the financial year 179,745,431 179,314,056
Earnings per ordinary share
- basic 10 40.99 sen 40.99 sen
- diluted 10 40.51 sen N/A*
* N/A – Not applicable
Company2002 2001
Note RM RM
Revenue 6 3,960,000 3,960,000
Other operating income 32,870,919 3,201,340
Staff cost (277,357) (396,278)
Administrative expenses (951,870) (773,365)
Amortisation of leasehold land (88,045) (95,404)
Profit from operations 7 35,513,647 5,896,293
Finance cost 8 (32,839,198) (3,051,830)
Profit from ordinary activities before taxation 2,674,449 2,844,463
Taxation 9 (804,303) (846,760)
Net profit for the financial year 1,870,146 1,997,703
Company Income Statementfor the financial year ended 31 December 2002
The notes on pages 125 to 157 form an integral part of these financial statements.
Balance Sheetsas at 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 121
Group Company2002 2001 2002 2001
Note RM RM RM RM
Non-current assetsProperty, plant and equipment 11 1,528,702,848 1,606,425,301 8,283,525 8,371,570Project development expenditure 12 245,838,486 255,727,275 0 0Subsidiaries 13 0 0 123,000,105 123,000,105Associate 14 0 0 0 0Other investments 15 12,662 45,050 0 0Junior Notes A 16 0 0 196,775,846 177,609,835Advances to a subsidiary 17 0 0 361,368,807 361,368,807Debt Service Reserve Account 18 79,618,389 77,249,387 0 0Long-term receivables 19 106,108,547 159,225,537 0 0
1,960,280,932 2,098,672,550 689,428,283 670,350,317
Current assetsInventories 20 817,277 1,051,835 0 0Trade and other receivables 21 819,850,967 538,445,470 17,007,741 10,857,054Tax recoverable 1,122,603 234,576 524,387 234,576Deposits, bank and cash balances 23 85,316,135 61,960,624 544,693 1,016,036
907,106,982 601,692,505 18,076,821 12,107,666
Less: Current liabilitiesTrade and other payables 24 160,596,262 121,414,890 1,828,991 2,031,887Hire-purchase payables 25 977,149 1,176,156 0 0Borrowings 26 86,170,443 98,081,664 0 0Taxation 0 649,210 0 0
247,743,854 221,321,920 1,828,991 2,031,887
Net current assets 659,363,128 380,370,585 16,247,830 10,075,779
Less: Non-current liabilitiesLong-term borrowings 27 1,439,397,047 1,484,247,493 196,775,846 177,609,835Hire-purchase payables 25 3,063,230 1,571,150 0 0
1,442,460,277 1,485,818,643 196,775,846 177,609,8351,177,183,783 993,224,492 508,900,267 502,816,261
Capital and reservesShare capital 28 439,278,000 437,500,000 439,278,000 437,500,000Share premium 53,294,348 50,858,488 53,294,348 50,858,488Reserve on consolidation 92,322 92,322 0 0Merger reserve (40,999,998) (40,999,998) 0 0Retained earnings 29 725,519,111 545,773,680 16,327,919 14,457,773
1,177,183,783 993,224,492 508,900,267 502,816,261
Consolidated Statement of Changes in Equityfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 122
Share capital Non-distributable Distributable
Nominal Share Reserve on Merger Retainedvalue premium consolidation reserve earnings Total
Note RM RM RM RM RM RM
Group
At 1 January 2001 437,500,000 50,858,488 92,322 (40,999,998) 366,459,624 813,910,436
Net profit for the financial year 0 0 0 0 179,314,056 179,314,056
At 31 December 2001 437,500,000 50,858,488 92,322 (40,999,998) 545,773,680 993,224,492
Issue of share capital 28 1,778,000 2,435,860 0 0 0 4,213,860
Net profit for the financial year 0 0 0 0 179,745,431 179,745,431
At 31 December 2002 439,278,000 53,294,348 92,322 (40,999,998) 725,519,111 1,177,183,783
Non-Share capital distributable Distributable
Nominal Share Retainedvalue premium earnings Total
Note RM RM RM RM
Company
At 1 January 2001 437,500,000 50,858,488 12,460,070 500,818,558
Net profit for the financial year 0 0 1,997,703 1,997,703
At 31 December 2001 437,500,000 50,858,488 14,457,773 502,816,261
Issue of share capital 28 1,778,000 2,435,860 0 4,213,860
Net profit for the financial year 0 0 1,870,146 1,870,146
At 31 December 2002 439,278,000 53,294,348 16,327,919 508,900,267
Company Statement of Changes in Equityfor the financial year ended 31 December 2002
The notes on pages 125 to 157 form an integral part of these financial statements.
Puncak Niaga Holdings Berhad Annual Report 2002 123
The notes on pages 125 to 157 form an integral part of these financial statements.
Cash Flow Statementsfor the financial year ended 31 December 2002
Group Company2002 2001 2002 2001
Note RM RM RM RM
Operating activities
Receipts from customer 352,176,593 393,796,524 0 0
Dividends received 0 0 2,764,800 2,764,800
Payments for operating expenses (140,930,550) (165,727,298) (1,602,471) (1,302,519)
Payments to contractors (1,508,674) (74,551,425) 0 0
Net cash generated from operations 30 209,737,369 153,517,801 1,162,329 1,462,281
Interest paid (99,669,941) (98,641,528) (13,671,875) 0
Taxation paid (1,905,450) (1,206,136) (18,914) (1,206,136)
Interest received 1,060,183 671,394 13,704,908 149,510
(100,515,208) (99,176,270) 14,119 (1,056,626)
Net cash inflow from operating
activities 109,222,161 54,341,531 1,176,448 405,655
Investing activities
Purchase of property, plant and
equipment (10,983,077) (6,701,032) 0 (249,801)
Purchase of Junior Notes A 0 0 0 (176,093,750)
Advances to subsidiaries 0 0 (5,861,651) 0
Repayment of advances by a subsidiary 0 0 0 48,000,000
Proceeds from disposal of property,
plant and equipment 622,311 911,390 0 0
Net cash outflow from investing activities (10,360,766) (5,789,642) (5,861,651) (128,343,551)
Financing activities
Proceeds from long-term borrowings 0 287,357,485 0 176,093,750
Exercise of share options pursuant
to ESOS 4,213,860 0 4,213,860 0
Repayment of borrowings (78,000,000) (277,988,554) 0 (48,000,000)
Repayment of hire-purchase (1,719,744) (1,819,177) 0 0
Repayment of advances to a related party 0 (4,347,241) 0 0
Payment of debt issuance expenses 0 (5,848,665) 0 0
Net cash (outflow)/inflow from
financing activities (75,505,884) (2,646,152) 4,213,860 128,093,750
Cash Flow Statementsfor the financial year ended 31 December 2002 (continued)
Puncak Niaga Holdings Berhad Annual Report 2002 124
The notes on pages 125 to 157 form an integral part of these financial statements.
Group Company2002 2001 2002 2001
Note RM RM RM RM
Net increase/(decrease) in cash and
cash equivalents 23,355,511 45,905,737 (471,343) 155,854
Cash and cash equivalents at
beginning of the financial year 61,960,624 42,054,887 1,016,036 860,182
Transfer to Debt Service Reserve
Account 18 0 (26,000,000) 0 0
Transfer to designated account for
repayment of Term Loan (DSS II) 23 (55,726,548) 0 0 0
Cash and cash equivalents at
end of the financial year 29,589,587 61,960,624 544,693 1,016,036
Cash and cash equivalents comprise:
Deposits with licensed banks 56,580,289 12,855,989 0 0
Less: Deposits held in a designated
account for repayment of
Term Loan (DSS II) 23 (55,726,548) 0 0 0
853,741 12,855,989 0 0
Bank and cash balances 28,735,846 49,104,635 544,693 1,016,036
29,589,587 61,960,624 544,693 1,016,036
Puncak Niaga Holdings Berhad Annual Report 2002 125
1 General information
The Group is principally engaged in the operation, maintenance, management, construction and rehabilitation of water
treatment facilities. The principal activities of the Company during the financial year are that of investment holding and
provision of management services. The principal activities of the subsidiaries are set out in Note 13 to the financial statements.
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Board of
the Kuala Lumpur Stock Exchange.
The address of the registered office of the Company is as follows:
Suite 1401 - 1406, 14th Floor
Plaza See Hoy Chan
Jalan Raja Chulan
50200 Kuala Lumpur
The Company has no corporate shareholder being regarded by the Directors of the Company as the ultimate holding company
nor as the holding company.
The Group and the Company did not transact in foreign currencies during the financial year. All transactions and balances of
the Group and of the Company are denominated in Ringgit Malaysia.
2 Financial risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including interest rate risk, market risk, credit risk, liquidity
and cash flow risk. The Group’s overall financial risk management objective is to ensure that the Group creates value for its
shareholders. The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
on the financial performance of the Group. Finance risk management is carried out through risk reviews, internal control
systems, insurance programmes and adherence to Group financial risk management policies. The Board regularly reviews
these risks and approves the risk management policies, which covers the management of these risks.
Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates. Interest
rate exposure arises from the Group’s borrowings and deposits, and is managed through the use of a mix of fixed and
floating rate debts.
Market risk
For key product and/or service purchases, the Group establishes floating and fixed priced levels that the Group considers
acceptable. The bulk supply rates charged by Puncak Niaga (M) Sdn. Bhd. (‘PNSB’), a wholly-owned subsidiary, to the State
Government of Selangor for the supply of treated water is indexed to changes in prices of chemicals, electricity tariff and
Consumer Price Index. Accordingly, this helps to mitigate inflation risk.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 126
Notes to the Financial Statementsfor the financial year ended 31 December 2002
2 Financial risk management objectives and policies (continued)
Credit risk
Credit risk arises when sales are made on deferred credit terms. The Group’s credit risk is concentrated on a single customer
i.e. the State Government of Selangor, and the terms of payments are stated in the concession agreements with the State
Government of Selangor.
At present, the Group is solely dependent on the State Government of Selangor being a single customer for the purchase of
its treated water and due to this sole dependency on the State Government of Selangor for revenue, any late or non-payment
by the State Government of Selangor may have an adverse impact on the cash flows and/or profits of the Group.
The Group seeks to control credit risk by continuously holding discussions and negotiations with the State Government of
Selangor with respect to the settlement and recoverability of the amounts due.
Liquidity and cash flow risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate
amount of committed credit facilities and the ability to close out market positions. Due to the capital intensive and project
based nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit
lines available.
3 Award of concessions
PNSB, a wholly-owned subsidiary, had been awarded the following concessions by the State Government of Selangor:
(i) to take over, operate, maintain, manage, rehabilitate and refurbish existing water treatment plants located in Selangor
Darul Ehsan and Wilayah Persekutuan of Kuala Lumpur for a period of 26 years ending on 31 December 2020; and
(ii) to construct, operate, maintain and manage the new water treatment facilities, namely the Sungai Selangor Water Supply
Scheme Phase 2, Stages I and II (‘SSP2’) for a period of 26 years ending on 31 December 2020.
On 17 January 1998, PNSB was given a right by the Federal Government to develop a water treatment plant and its related
facilities in Wangsa Maju. The construction work commenced in January 1998 and was completed in July 1998. Subsequent
to the completion, PNSB has been managing, operating and maintaining the water treatment plant.
4 Basis of preparation
The financial statements of the Group and of the Company have been prepared under the historical cost convention unless
otherwise indicated in the summary of significant accounting policies below. The financial statements comply with the
applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
Puncak Niaga Holdings Berhad Annual Report 2002 127
4 Basis of preparation (continued)
The new applicable approved accounting standards adopted in the financial statements of the Group and of the Company for
the financial year ended 31 December 2002 are as follows:
(a) Restrospective application
(i) MASB Standard 19 “Events After the Balance Sheet Date”
(ii) MASB Standard 20 “Provisions, Contingent Liabilities and Contingent Assets”
(iii) MASB Standard 22 “Segment Reporting”
The adoption of the above new Standards did not have any significant impact to the presentation of the financial statements
nor to the income recognition and measurement principles of the Group and of the Company.
(b) Prospective application from 1 January 2002
(i) MASB Standard 21 “Business Combinations”
The Group has elected to adopt the transitional provision to apply this Standard prospectively. Accordingly, the
effects of the business combination of PNSB under the merger accounting entered into prior to 1 January 2002 have
not been restated.
(ii) MASB Standard 23 “Impairment of Assets”
The adoption of this new Standard did not have any material impact to the financial statements.
(iii) MASB Standard 24 “Financial Instruments: Disclosure and Presentation”
The Group has elected to adopt the transitional provision to apply this Standard prospectively. Accordingly, the
following presentation and disclosures have been adopted in the financial statements:
• comparatives are not disclosed upon first application of this Standard; and
• the effects of compound instruments issued prior to 1 January 2002 have not been reclassified to its liability and
equity components.
This Standard is not intended to apply to the recognition, measurement and disclosure of transactions and events
conducted on the basis of Islamic banking principles.
The preparation of financial statements in conformity with the applicable approved accounting standards in Malaysia and the
provisions of the Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reported financial year. Actual results could differ from those estimates.
5 Summary of significant accounting policies
The following accounting policies have been used consistently in dealing with items which are considered material in relation
to the financial statements.
(a) Basis of consolidation
The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up
to the end of the financial year. Financial statements of subsidiaries are consolidated from the date on which control is
transferred to the Group and are no longer consolidated from the date when that control ceases.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 128
5 Summary of significant accounting policies (continued)
(a) Basis of consolidation (continued)
Financial statements of subsidiaries are consolidated using the acquisition method of accounting except for the financial
statements of PNSB, which is consolidated using the merger method of accounting in accordance with Malaysian
Accounting Standard No. 2 “Accounting for Acquisitions and Mergers”.
Merger method
Under the merger method of accounting, the results of the subsidiary is presented as if the merger had been effected
throughout the current and previous financial years. On consolidation, the difference between the carrying value of the
investment over the nominal value of the shares acquired is treated as merger reserve in accordance with the merger relief
provisions under Section 60(4) of the Companies Act, 1965.
Acquisition method
Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the financial
year are included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of
the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The
difference between the acquisition cost and the fair values of the subsidiaries’ net assets is reflected as goodwill or
reserve on consolidation as appropriate.
All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated,
unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the
financial statements of the subsidiaries to ensure consistency with the accounting policies adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its
net assets together with the goodwill on acquisition, and is recognised in the income statement in the financial year in
which the disposal is made.
(b) Goodwill on consolidation
Goodwill arising on consolidation represents the excess of the cost of acquisition of subsidiaries over the Group’s share of
the fair value of their separable net assets at the date of acquisition and is written off against the Group’s retained earnings.
Negative goodwill represents the excess of the fair value of the Group’s share of identifiable net assets acquired over the
cost of acquisition. Negative goodwill is presented in the same balance sheet classification as goodwill. To the extent that
negative goodwill relates to expectations of future losses and expenses that are identified in the Group’s plan for the
acquisition and can be measured reliably, but which do not represent identifiable liabilities, that portion of negative
goodwill is recognised in the income statement when the future losses and expenses are recognised. Any remaining
negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the income
statement over the remaining weighted average useful life of those assets; negative goodwill in excess of the fair values of
those assets is recognised in the income statement immediately.
(c) Subsidiaries
A subsidiary is an enterprise in which the Group has power to exercise control over the financial and operating policies
so as to obtain benefits from their activities.
Puncak Niaga Holdings Berhad Annual Report 2002 129
5 Summary of significant accounting policies (continued)
(c) Subsidiaries (continued)
Investments in subsidiaries are stated at cost except where, in the opinion of the Directors, there is an indication of
impairment, in which case the carrying amount of the investment is assessed and written down immediately to its
recoverable amount.
(d) Associate
An associate is an enterprise in which the Group is able to exercise significant influence. Significant influence is the ability
to participate in the financial and operating policy decisions of the associate but not control over those policies.
Investment in associate is stated at cost except where, in the opinion of the Directors, there is an indication of impairment,
in which case the carrying amount of the investment is assessed and written down immediately to its recoverable amount.
Investment in associate is accounted for in the consolidated financial statements using the equity method of accounting.
Equity accounting involves recognising in the income statement the Group’s share of the results of the associate for the
period. The Group’s investment in associate is carried in the balance sheet at an amount that reflects its share of the net
assets of the associate less premium paid on acquisition, which is written off against the Group’s retained earnings. Equity
accounting is discontinued when the carrying amount of the investment in an associate reaches zero, unless the Group
has incurred obligations or guaranteed obligations in respect of the associate.
Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group’s interest
in the associate. Unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset
transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of the
associate to ensure consistency of accounting policies with the Group.
(e) Jointly controlled entity
Jointly controlled entity comprises unincorporated joint venture over which there is contractually agreed sharing of
control by the Group with third parties. The Group’s interest in jointly controlled entity is accounted for in the
consolidated financial statements by the equity method of accounting.
Equity accounting involves recognising in the income statement the Group’s share of the results of the jointly controlled
entity for the period. The Group’s investment in the jointly controlled entity is carried in the balance sheet at an amount
that reflects its share of the net assets of the jointly controlled entity.
Unrealised gains on transactions between the Group and its jointly controlled entity are eliminated to the extent of the
Group’s interest in the jointly controlled entity; unrealised losses are also eliminated unless the transaction provides evidence
on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments have been made to the
financial statements of jointly controlled entity to ensure consistency of accounting policies with those of the Group.
(f) Other investments
Long-term investments are stated at cost and allowance is only made where, in the opinion of the Directors, there is a
permanent diminution in value. Permanent diminution in the value of an investment is recognised as an expense in the
financial year in which the diminution is identified.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 130
5 Summary of significant accounting policies (continued)
(f) Other investments (continued)
The gain or loss on disposal of an investment is the difference between net disposal proceeds and its carrying amount, and
is recognised in the income statement in the financial year in which the disposal is made.
Notes which are acquired and held up to maturity are stated at cost adjusted for amortisation of premium and/or accretion
of discount to maturity.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost, which comprises the acquisition cost and any incidental cost arising
from the acquisition, less accumulated depreciation and impairment losses except for capital work-in-progress which are
not depreciated. Long-term leasehold land is stated at cost less accumulated amortisation and impairment losses. The
long-term leasehold land is amortised over the period of the lease of 99 years.
All other property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset to their
residual values over their estimated useful lives at the following annual rates:
Water treatment plants Over the remaining period of the concessionending 31 December 2020
Plant and equipment 10% to 20%
Office equipment 20%
Furniture and fittings 20%
Motor vehicles 20%
Computers and software 33 1/3%
Renovation 20% to 33 1/3%
Where an indication of impairment exists, the carrying amount of an asset is assessed and written down immediately to
its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the income
statement in the financial year in which the disposals are made.
(h) Assets acquired under hire-purchase arrangements
Property, plant and equipment acquired under hire-purchase are capitalised in the financial statements and are
depreciated in accordance with the accounting policy set out in Note 5(g) above. The corresponding outstanding
obligations due under the hire-purchase after deducting finance charges are included as liabilities in the financial
statements. Finance charges are allocated to the income statements over the periods of the respective agreements.
(i) Project development expenditure
Project development expenditure are stated at cost and comprise expenditure incurred for the rehabilitation and
refurbishment of water treatment facilities and concession acquisition cost. Project development expenditure are
amortised over the period of the concession. However, should no future economic benefits be expected to be derived from
the project development expenditure, the amount capitalised is charged as an expense in the income statement in the
financial year in which such a decision is made.
Puncak Niaga Holdings Berhad Annual Report 2002 131
5 Summary of significant accounting policies (continued)
(j) Construction contracts
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the
extent of contract costs incurred that it is probable will be recoverable and contract costs are recognised as expenses.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over
the period of the contract as revenue and expenses respectively. The Group uses the percentage of completion method to
determine the appropriate amount of revenue and costs to recognise in a given period; the stage of completion is measured by
reference to the actual costs incurred to date to the estimated total costs for each contract. When it is probable that total
contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
No profit is recognised where contract works are in its initial stage or have not reached a stage of completion where it is
possible to determine the financial outcome of the contract with reasonable accuracy.
The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings
up to the financial year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the
balance is shown as ‘Amounts due from customers on construction contracts’. Where progress billings exceed costs incurred
plus recognised profits (less recognised losses), the balance is shown as ‘Amounts due to customers on construction contracts’.
(k) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and
includes transportation and handling cost incurred.
(l) Receivables
Receivables are carried at anticipated realisable value. Bad debts are written off in the financial year in which they are
identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.
(m) Bonds and notes
Bonds and notes issued by the Company and the Group are initially recognised based on the proceeds received, net of
issuance expenses incurred and are adjusted in subsequent financial years for amortisation of premium and/or accretion of
discount to maturity, using the effective yield method. The premium amortised and/or discount accreted is recognised
in the income statement over the period of the bonds and notes.
(n) Capitalisation of borrowing costs
Borrowing costs incurred in connection with financing the construction of the capital work-in-progress are capitalised
and included as part of the construction costs respectively until the assets are ready for their intended use.
(o) Deferred taxation
Deferred taxation is provided for using the liability method in respect of all material timing differences between
accounting income and taxable income except where the tax effects of such timing differences are not expected to be
reversed in the foreseeable future.
Deferred tax benefits are recognised only if there is a reasonable expectation of their realisation in the foreseeable future.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 132
5 Summary of significant accounting policies (continued)
(p) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
(q) Revenue recognition
Revenue of the Group is recognised when the treated water is discharged through the reading meter installed at the
respective reservoirs.
Dividend income is recognised when the shareholder’s right to receive payment is established.
Management fee is recognised on an accrual basis.
Other revenue earned by the Group are recognised on the following bases:
(i) Revenue relating to long-term construction contracts are accounted for under the percentage of completion
method; the stage of completion is measured by reference to the actual costs incurred to date to estimated total
costs for each contract.
(ii) Interest income is recognised on an accrual basis.
(r) Financial instruments
Financial instruments carried on the balance sheet include deposits, bank and cash balances, other investments,
receivables, payables and borrowings.
(i) Financial instruments recognised on the balance sheet
The particular recognition methods adopted for financial instruments recognised on the balance sheet are disclosed
in the individual policy statements associated with each item.
(ii) Fair value estimation for disclosure purposes
The fair value of publicly traded securities is based on quoted market prices at the balance sheet date.
In assessing the fair value of financial instruments, the Group and the Company use a variety of methods and make
assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer
quotes for the specific or similar instruments are used for long term debt. Other technique, such as the discounted
value of future cash flows, is used to determine the fair value for the remaining financial instruments. In particular,
the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current
market interest rate available to the Group and the Company for similar financial instruments.
The face values for financial assets and liabilities with a maturity of less than one (1) year are assumed to approximate
their fair values.
6 Revenue
Group Company2002 2001 2002 2001
RM RM RM RM
Invoiced value of bulk quantity of treated
water supplied to the State Government
of Selangor 565,105,110 552,336,942 0 0
Gross dividend income 0 0 3,840,000 3,840,000
Management fees 0 0 120,000 120,000
565,105,110 552,336,942 3,960,000 3,960,000
7 Profit from operations
Group Company2002 2001 2002 2001
RM RM RM RM
The following items have been charged/(credited) in arriving at profit from operations:
Depreciation of property, plant and equipment 4,142,885 3,950,523 88,045 95,404
Amortisation of water treatment plants 81,946,473 80,782,067 0 0
Amortisation of project development expenditure 14,999,624 13,961,439 0 0
Rental of premises 2,413,310 1,874,649 0 0
Hire of transport and equipment 165,813 210,545 0 0
Accretion of discount on bonds and notes 20,401,865 2,647,671 19,166,011 1,516,085
Amortisation of debt issuance expenses 836,468 512,996 0 0
Directors’ remuneration:
- Directors of the Company
• other emoluments 260,426 257,748 260,426 257,748
- Directors of subsidiaries
• other emoluments 3,888,037 4,698,017 0 0
Auditors' remuneration 90,000 90,000 15,000 15,000
Allowance for diminution in value of
other investments 32,388 0 0 0
Interest income from deferred payment contract (8,775,680) (8,802,901) 0 0
Interest income on deposits (3,434,301) (2,137,656) (33,033) (149,510)
Interest income on advances to a subsidiary 0 0 (13,671,875) (1,535,745)
Income from discount on notes 0 0 (19,166,011) (1,516,085)
Profit on construction contracts * 0 (148,382) 0 0
Gain on disposal of property, plant and equipment (510,404) (198,649) 0 0
Puncak Niaga Holdings Berhad Annual Report 2002 133
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 134
7 Profit from operations (continued)
* Profit on construction contracts of the Group is arrived at as follows:
Group 2002 2001
RM RM
Gross revenue recognised 0 38,489,068
Contract cost recognised 0 (38,340,686)
0 148,382
The estimated monetary value of benefits-in-kind provided to the Directors of the Group by way of usage of the Group’s assets
and provision of other benefits amounted to RM230,491 (2001:RM138,906).
The number of persons employed by the Group and the Company at the end of the financial year were 616 (2001:617) and
Nil (2001:1) respectively.
8 Finance cost
Group Company2002 2001 2002 2001
RM RM RM RM
Finance cost comprises:
Financing cost on borrowings under Islamic
banking principles 79,136,153 84,087,183 0 0
Financing cost on conventional borrowings 56,152,340 28,403,450 32,837,886 3,051,830
Interest expense on hire-purchase 369,680 389,248 0 0
Bank charges 393,262 102,611 1,312 0
Other interest expense 0 43 0 0
136,051,435 112,982,535 32,839,198 3,051,830
9 Taxation
The taxation charge in the income statements represents:
Group Company2002 2001 2002 2001
RM RM RM RM
Malaysian income tax based on the chargeable income
for the financial year 606,190 349,720 804,303 821,710
(Over)/underprovision in prior years (237,978) 25,050 0 25,050
368,212 374,770 804,303 846,760
Puncak Niaga Holdings Berhad Annual Report 2002 135
9 Taxation (continued)
The taxation charge for the Group for the financial year is principally in respect of interest income received by its subsidiary.
The effective tax rate of the Group is lower than the applicable statutory tax rate due to the utilisation of available capital
allowances. The amount of tax savings arising from the utilisation of the capital allowances for the Group for which credit is
taken for the financial year is approximately RM78,701,000 (2001:RM76,213,000).
The taxation charge for the Company for the financial year is principally in respect of dividend income received from its
subsidiary. The effective tax rate of the Company is higher than the applicable statutory tax rate due to the disallowance of
certain expense items as a deduction for taxation purposes.
Group Company2002 2001 2002 2001
RM RM RM RM
Tax losses
Tax savings as a result of the utilisation of current year
tax losses for which the related tax credit is recognised
during the financial year 9,465,505 253,490 9,465,505 253,490
Tax savings from the utilisation of tax losses
brought forward from previous years for
which the related tax credit is recognised
during the financial year 545,600 0 0 0
Tax losses for which the related tax credit has not been
recognised in the financial statements 594,078 1,139,658 127,822 127,822
10 Earnings per ordinary share
The basic earnings per ordinary share of the Group for the financial year of 40.99 sen (2001:40.99 sen) is calculated by
dividing the net profit for the financial year of RM179,745,431 (2001:RM179,314,056) by the weighted average number of
ordinary shares in issue during the financial year of 438,543,449 (2001:437,500,000) shares.
The diluted earnings per ordinary share of the Group for the financial year of 40.51 sen (2001:not applicable) is calculated by
dividing the net profit for the financial year of RM179,745,431 by the weighted average number of ordinary shares in issue
adjusted to assume the conversion of all dilutive potential ordinary shares i.e. warrants, which was granted for free to all
subscribers of the RUN (Note 27(iv)), and share options granted to the eligible employees pursuant to the ESOS (Note 28).
In assessing the dilution in earnings per share arising from the issue of both warrants and share options, a calculation is done
to determine the number of shares that could have been acquired at market price. This calculation serves to determine the
‘bonus’ element to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to net
profit for the financial year in the calculation of the diluted earnings per share in connection with the issue of the warrants
and share options.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Group
Puncak Niaga Holdings Berhad Annual Report 2002 136
10 Earnings per ordinary share (continued)
2002RM
Net profit for the financial year 179,745,431
Weighted average number of ordinary shares in issue 438,543,449
Adjustment for:
- warrants 2,108,483
- share options 3,082,752
Weighted average number of ordinary shares for diluted earnings per share 443,734,684
Diluted earnings per share 40.51 sen
The comparative for diluted earnings per ordinary share is not presented in the financial statements as the effects of the
assumed exercise of warrants in prior financial year is anti-dilutive. The share options were granted to the eligible employees
during the financial year.
11 Property, plant and equipment
Long-term Water Plant Furniture Computersleasehold treatment and Office and Motor and
land plants equipment equipment fittings vehicles software Renovation TotalRM RM RM RM RM RM RM RM RM
2002
Cost
At 1 January 8,716,411 1,746,704,712 7,820,490 2,097,747 3,174,286 11,191,726 5,148,602 5,208,551 1,790,062,525
Additions 0 2,734,201 79,555 282,041 55,092 3,152,485 1,228,963 941,146 8,473,483
Disposals 0 0 (30,000) 0 0 (2,349,166) 0 0 (2,379,166)
At 31 December 8,716,411 1,749,438,913 7,870,045 2,379,788 3,229,378 11,995,045 6,377,565 6,149,697 1,796,156,842
Accumulated
depreciation
At 1 January 344,841 160,828,817 977,505 1,643,479 3,026,825 8,093,625 3,849,735 4,872,397 183,637,224
Charge for the
financial year 88,045 81,946,473 852,000 220,045 91,613 1,737,122 918,033 236,027 86,089,358
Released on
disposals 0 0 (5,250) 0 0 (2,267,338) 0 0 (2,272,588)
At 31 December 432,886 242,775,290 1,824,255 1,863,524 3,118,438 7,563,409 4,767,768 5,108,424 267,453,994
Net book value
At 31 December 8,283,525 1,506,663,623 6,045,790 516,264 110,940 4,431,636 1,609,797 1,041,273 1,528,702,848
Group
Puncak Niaga Holdings Berhad Annual Report 2002 137
11 Property, plant and equipment (continued)
Long-term Water Plant Furniture Computersleasehold treatment and Office and Motor and
land plants equipment equipment fittings vehicles software Renovation TotalRM RM RM RM RM RM RM RM RM
2001
Cost
At 1 January 8,466,610 1,721,904,044 2,718,419 2,073,157 3,334,389 11,493,203 4,327,543 4,827,306 1,759,144,671
Additions 249,801 24,800,668 5,912,655 179,714 33,156 453,711 841,784 389,290 32,860,779
Disposals 0 0 (810,584) (155,124) (193,259) (755,188) (20,725) (8,045) (1,942,925)
At 31 December 8,716,411 1,746,704,712 7,820,490 2,097,747 3,174,286 11,191,726 5,148,602 5,208,551 1,790,062,525
Accumulated
depreciation
At 1 January 249,437 80,046,750 592,700 1,496,442 2,907,157 6,911,901 3,141,258 4,789,173 100,134,818
Charge for the
financial year 95,404 80,782,067 732,360 252,819 246,313 1,811,187 728,099 84,341 84,732,590
Released on
disposals 0 0 (347,555) (105,782) (126,645) (629,463) (19,622) (1,117) (1,230,184)
At 31 December 344,841 160,828,817 977,505 1,643,479 3,026,825 8,093,625 3,849,735 4,872,397 183,637,224
Net book value
At 31 December 8,371,570 1,585,875,895 6,842,985 454,268 147,461 3,098,101 1,298,867 336,154 1,606,425,301
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 138
11 Property, plant and equipment (continued)
Company Long-termleasehold land
RM
2002
Cost
At 1 January/31 December 8,716,411
Accumulated depreciation
At 1 January 344,841
Charge for the financial year 88,045
At 31 December 432,886
Net book value
At 31 December 8,283,525
2001
Cost
At 1 January 8,466,610
Additions 249,801
At 31 December 8,716,411
Accumulated depreciation
At 1 January 249,437
Charge for the financial year 95,404
At 31 December 344,841
Net book value
At 31 December 8,371,570
At 31 December 2002, the unexpired period of lease of the long-term leasehold land is 97 years.
Included in cost of water treatment plants are interest and financing cost on long-term borrowings capitalised amounting to
RM286,075,263 (2001:RM286,075,263).
Property, plant and equipment of a wholly-owned subsidiary, PNSB, with a total net book value of RM1,520,384,302
(2001:RM1,598,005,574), have been charged as security for long-term borrowings (Note 27(iii)).
In determining the recoverable amount of property, plant and equipment of the Group with the exception of the long-term
leasehold land, expected future cash flows have been discounted to their present value.
Puncak Niaga Holdings Berhad Annual Report 2002 139
11 Property, plant and equipment (continued)
Assets acquired under hire-purchase arrangements
The value of the property, plant and equipment of the Group includes the following assets acquired under hire-purchase
arrangements:
2002 2001Motor vehicles RM RM
Cost 6,843,637 7,939,111
Accumulated depreciation (2,690,524) (5,083,051)
Net book value 4,153,113 2,856,060
12 Project development expenditure
Group2002 2001
RM RM
CostAt 1 January 310,603,705 289,882,232
Additions 5,110,835 20,721,473
315,714,540 310,603,705
Accumulated amortisation (69,876,054) (54,876,430)
At 31 December 245,838,486 255,727,275
Included in project development expenditure is concession acquisition cost of RM14,847,596 (2001:RM14,847,596) with an
unamortised balance of RM10,785,240 (2001:RM11,384,573) at the end of the financial year.
13 Subsidiaries
Company2002 2001RM RM
Unquoted shares in Malaysia, at cost 123,000,105 123,000,105
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 140
13 Subsidiaries (continued)
The details of the subsidiaries are as follows:
Country of Effective equity interest
Name of company incorporation held by the Group Principal activities
2002 2001% %
Puncak Niaga (M) Sdn. Bhd. # Malaysia 100 100 Operation, maintenance,
management, construction and
undertaking the rehabilitation
and refurbishment of water
treatment facilities
Held through 100% ownership by
Puncak Niaga (M) Sdn. Bhd.
- Ideal Water Resources Sdn. Bhd.* Malaysia 100 100 Operation, management,
maintenance and undertaking
the rehabilitation and
refurbishment of water
treatment plants
- Unggul Raya (M) Sdn. Bhd.* Malaysia 100 100 Operation, management,
maintenance and monitoring
the operation of dams
Puncak Research Centre Sdn. Bhd.* Malaysia 100 100 Dormant
Puncak Seri (M) Sdn. Bhd.* Malaysia 100 100 Dormant
NS Water System Sdn. Bhd.* Malaysia 100 100 Dormant
# subsidiary consolidated using the merger accounting method
* not audited by PricewaterhouseCoopers, Malaysia
14 Associate
Group Company2002 2001 2002 2001
RM RM RM RM
Unquoted investment in Malaysia, at cost 20,000 20,000 20,000 20,000
Allowance for diminution in value of investment 0 0 (20,000) (20,000)
Share of loss in associate (20,000) (20,000) 0 0
0 0 0 0
The Group has excluded its share of cumulative loss after taxation of the associate amounting to RM18,483
(2001:RM18,357) from the financial statements following the discontinuation of the equity accounting for the results of the
associate as the carrying value of this investment has reached zero.
Puncak Niaga Holdings Berhad Annual Report 2002 141
14 Associate (continued)
The details of the associate are as follows:
Country of Effective equity interest
Name of company incorporation held by the Group Principal activities
2002 2001
% %
NS Water Management Sdn. Bhd. Malaysia 40 40 Dormant
15 Other investments
Group2002 2001
RM RM
Quoted shares in Malaysia, at cost 471,139 471,139
Allowance for diminution in value of other investments (458,477) (426,089)
12,662 45,050
Market value of quoted investments 12,662 16,488
The market value of these investments at the balance sheet date is equivalent to the fair value.
16 Junior Notes A
Company2002 2001RM RM
Nominal value 546,875,000 546,875,000
Less: Yield to maturity (370,781,250) (370,781,250)
At cost 176,093,750 176,093,750
Cumulation of accretion of yield to maturity 20,682,096 1,516,085
196,775,846 177,609,835
The Company subscribed for RM546,875,000 nominal value of Junior Notes A (‘JNA’) issued on 20 November 2001 by its
wholly-owned subsidiary, PNSB, at an issue price of RM0.322 per RM1.00 nominal value of JNA. The JNA are redeemable,
unconvertible, unsecured and substantially mirror the structure of the Redeemable Unconvertible Junior Notes (‘RUN’)
issued by the Company. The proceeds of the JNA was utilised to repay RM168 million of PNSB’s Al-Murabahah Commercial
Papers (‘MCPs’) with the remaining balance utilised for its working capital purposes.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 142
16 Junior Notes A (continued)
The main features of the JNA are as follows:
(a) The JNA carries a coupon rate of 2.5% per annum receivable semi-annually for the immediate ten (10) years from the
date of issue of the JNA and 3.5% per annum receivable semi-annually thereafter for the next five (5) years.
(b) PNSB shall redeem the JNA in ten (10) equal instalments each comprising 10% of the aggregate nominal value of all
outstanding JNA commencing on the sixth (6th) anniversary of the date of issue of the JNA. On the tenth (10th)
anniversary of the date of issue of the JNA, PNSB has the option to redeem the JNA by paying the principal amount
outstanding on that date. On the same day, the holders of the JNA also have the option to sell the JNA back to PNSB
for a consideration equivalent to the principal amount outstanding on that day.
(c) The JNA was issued back-to-back with the RUN. Proceeds from the RUN was immediately utilised to subscribe for the
JNA by the Company. Accordingly, the proceeds from the coupon payments and redemptions of the JNA would be
utilised by the Company for coupon payments and redemptions of the RUN.
At balance sheet date, the carrying amount of the JNA approximated the fair value.
The effective interest rate applicable to the JNA at the balance sheet date was 7.30% (2001: 7.70%) per annum.
17 Advances to a subsidiary
The advances to a wholly-owned subsidiary, PNSB, are unsecured, interest free and are not repayable within the period of
twelve (12) months from the balance sheet date.
The carrying amount of these advances at the balance sheet date were not reduced to their estimated fair value of
RM345,807,471 (Note 35) as these advances are receivable from a profitable wholly-owned subsidiary and the Directors are
of the opinion that the amounts are recoverable in full.
18 Debt Service Reserve Account
Under the terms of agreement for the issue of the RM1,020 million 10 years Al-Bai’ Bithaman Ajil Islamic Debt Securities
primary bonds together with non-detachable secondary bonds (‘BaIDS’) and RM350 million MCPs/Al-Murabahah Medium
Term Notes (‘MMTNs’) Issuance Facility by its wholly-owned subsidiary, PNSB, a deposit equivalent to twelve (12) months
projected payment obligations under the BaIDS and MCPs/MMTNs that are outstanding at any point in time is required to be
placed in a Debt Service Reserve Account (‘DSRA’). PNSB is not entitled to withdraw any money from the DSRA without prior
consent of the Security Trustee except on condition that the BaIDS and MCPs/MMTNs have been fully redeemed (Note 27(iii)).
At the balance sheet date, the carrying amount of the deposits held in the DSRA approximated the fair value. The deposits
held in the DSRA is maintained for long term until the full redemption and expiry of the BaIDS on 27 October 2010
(Note 27(iii)) and is presently yielding interest income at market interest rates.
The weighted average effective interest rate applicable to the deposits held in the DSRA at the balance sheet date was 2.97%
(2001:2.90%) per annum.
Puncak Niaga Holdings Berhad Annual Report 2002 143
19 Long-term receivables
The long-term receivables mainly represent an amount due from a customer i.e. the State Government of Selangor, on contract
in respect of the Sungai Selangor Water Supply Scheme Phase 2 - Distribution Supply System II (‘DSS II’) which was
completed on 6 July 2001. Pursuant to the terms of the contract, the payments for the contract sum are to be made over a
period of five (5) years commencing from 2001 (Note 21).
Group2002 2001
RM RM
Deferred repayment periods are as follows:
Amount receivable within 12 months (included in trade receivables - Note 21) 59,338,454 72,083,447
Amount receivable after 12 months 106,108,547 159,225,537
165,447,001 231,308,984
Included in amount receivable after twelve (12) months is retention sum on contract amounting to RM8,314,334
(2001:RM8,314,334).
The weighted average effective interest rate per annum applicable to the long-term receivables at the balance sheet date and
the fair value of long-term receivables as at balance sheet date were as follows:
Weighted average effective interest rate
Carrying Fair per annumamount value 2002 2001
RM RM % %
Group
Long-term receivables (excluding retention sum) 157,132,667 155,089,270 5.00 5.00
Retention sum 8,314,334 7,653,181 0 0
Long-term receivables (Note 35) 165,447,001 162,742,451
The carrying amount of the long-term receivables at the balance sheet date were not reduced to their estimated fair value of
RM162,742,451 as the Directors are of the opinion that the amounts are recoverable.
20 Inventories
Group2002 2001
RM RM
Water treatment chemicals, at cost 817,277 1,051,835
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 144
21 Trade and other receivables
Group Company2002 2001 2002 2001
RM RM RM RM
Trade receivables 780,816,547 505,916,236 0 0
Advances and loans to staff 1,745,350 2,492,545 0 0
Amounts due from subsidiaries (Note 22) 0 0 11,713,479 5,730,304
Sundry receivables 34,044,584 28,040,335 5,194,262 5,126,750
Deposits 2,125,244 1,501,394 100,000 0
Prepayments 1,119,242 494,960 0 0
819,850,967 538,445,470 17,007,741 10,857,054
Included in trade receivables is RM59,338,454 (2001:RM72,083,447) representing unpaid and current portion of deferred
payments on contract due within twelve (12) months, pursuant to the DSS II contract.
Included in sundry receivables of the Group is RM8,442,598 (2001:RM11,448,958) due from a subsidiary of Central Plus
(M) Sdn. Bhd. (‘CPMSB’), a substantial corporate shareholder of the Company.
The credit term of trade receivables is 30 days.
22 Amounts due from subsidiaries
The amounts due from subsidiaries are interest free, unsecured and payable at call.
23 Deposits, bank and cash balances
Group Company2002 2001 2002 2001
RM RM RM RM
Deposits with licensed banks 56,580,289 12,855,989 0 0
Bank and cash balances 28,735,846 49,104,635 544,693 1,016,036
85,316,135 61,960,624 544,693 1,016,036
Included in deposits with licensed banks are restricted monies amounting to RM55,726,548 (2001:RM Nil) representing
deposits in a designated account for the repayment of the Term Loan (DSS II) (Note 27 (ii)).
The weighted average effective interest rate applicable to deposits with licensed banks at the balance sheet date was 2.53%
(2001:2.70%) per annum.
Deposits of the Group have an average maturity of 14 days (2001:30 days).
Puncak Niaga Holdings Berhad Annual Report 2002 145
24 Trade and other payables
Group Company2002 2001 2002 2001
RM RM RM RM
Trade payables 72,466,155 48,264,097 0 0
Amounts due to contractors 3,789,973 1,479,973 0 0
Finance cost payable 65,849,524 51,726,910 1,535,745 1,535,745
Trade accruals 18,455,888 19,834,189 293,246 496,142
Retention sum 17,923 92,922 0 0
Amount owing to Directors 16,799 16,799 0 0
160,596,262 121,414,890 1,828,991 2,031,887
Included in trade payables and trade accruals are RM70,897,978 (2001:RM44,753,806) and RM81,000 (2001:RM100,000)
respectively which are amounts due to subsidiaries of CPMSB, a substantial corporate shareholder of the Company.
The credit term of trade payables granted to the Group is 30 days. Notwithstanding, the Group is paying its major trade
payables on back-to-back terms based on collections from its sole customer i.e. the State Government of Selangor.
25 Hire-purchase payables
Group2002 2001
RM RM
Analysis of hire-purchase payables:
Payable within one year 1,254,032 1,311,494
Payable between one and two years 1,073,052 679,646
Payable between two and five years 2,212,759 996,112
Payable after five years 300,582 280,249
4,840,425 3,267,501
Less: Financing charges (800,046) (520,195)
4,040,379 2,747,306
Present value of hire-purchase payables:
Payable within one year 977,149 1,176,156
Payable between one and two years 952,103 604,003
Payable between two and five years 1,998,415 911,610
Payable after five years 112,712 55,537
4,040,379 2,747,306
Representing hire-purchase payables, net of interest-in-suspense:
Payable within 12 months 977,149 1,176,156
Payable after 12 months 3,063,230 1,571,150
4,040,379 2,747,306
25 Hire-purchase payables (continued)The weighted average effective interest rate per annum applicable to hire-purchase payables at the balance sheet date and thefair value of hire-purchase payables as at balance sheet date were as follows:
Weighted averageeffective interest rate
Carrying Fair per annumamount value 2002 2001
RM RM % %
Group
Hire-purchase payables (Note 35) 4,040,379 4,306,549 5.01 6.24
26 BorrowingsGroup
2002 2001RM RM
Secured:
Government support loan due within 12 months (Note 27) 30,443,895 24,355,116
Term loan (DSS II) due within 12 months (Note 27) 55,726,548 55,726,548
Al-Murabahah Commercial Papers due within 12 months (Note 27) 0 18,000,000
86,170,443 98,081,664
27 Long-term borrowingsGroup Company
2002 2001 2002 2001RM RM RM RM
Secured:
Government support loan 121,775,579 121,775,579 0 0
Term loan (DSS II) 171,936,831 171,936,831 0 0
Al-Bai’ Bithaman Ajil Bonds 1,008,601,662 1,006,831,662 0 0
Al-Murabahah Commercial Papers 32,000,000 110,000,000 0 0
Redeemable Unconvertible Junior Notes 191,253,418 171,785,085 196,775,846 177,609,835
1,525,567,490 1,582,329,157 196,775,846 177,609,835
Due within 12 months
Government support loan (Note 26) 30,443,895 24,355,116 0 0
Term loan (DSS II) (Note 26) 55,726,548 55,726,548 0 0
Al-Murabahah Commercial Papers (Note 26) 0 18,000,000 0 0
86,170,443 98,081,664 0 0
Due after 12 months
Government support loan 91,331,684 97,420,463 0 0
Term loan (DSS II) 116,210,283 116,210,283 0 0
Al-Bai’ Bithaman Ajil Bonds 1,008,601,662 1,006,831,662 0 0
Al-Murabahah Commercial Papers 32,000,000 92,000,000 0 0
Redeemable Unconvertible Junior Notes 191,253,418 171,785,085 196,775,846 177,609,835
1,439,397,047 1,484,247,493 196,775,846 177,609,835
1,525,567,490 1,582,329,157 196,775,846 177,609,835
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 146
Puncak Niaga Holdings Berhad Annual Report 2002 147
27 Long-term borrowings (continued)
Analysis of borrowings:
Group Company2002 2001 2002 2001
RM RM RM RM
Payable within one year 86,170,443 98,081,664 0 0
Payable between one and two years 59,493,388 59,493,388 0 0
Payable between two and five years 653,072,011 533,072,011 0 0
Payable after five years 726,831,648 891,682,094 196,775,846 177,609,835
1,525,567,490 1,582,329,157 196,775,846 177,609,835
All the long-term borrowings carry fixed interest rates except for the Al-Murabahah Commercial Papers.
The Al-Bai Bithaman Ajil Bonds and Redeemable Unconvertible Junior Notes are further analysed as follows:
Group Group CompanyRedeemable Unconvertible Redeemable Unconvertible
Al-Bai' Bithaman Ajil Bonds Junior Notes Junior Notes2002 2001 2002 2001 2002 2001
RM RM RM RM RM RM
Nominal value 1,020,000,000 1,020,000,000 546,875,000 546,875,000 546,875,000 546,875,000
Less: Yield to maturity (10,532,693) (10,532,693) (370,781,250) (370,781,250) (370,781,250) (370,781,250)
1,009,467,307 1,009,467,307 176,093,750 176,093,750 176,093,750 176,093,750
Less: Debt issuance expenses (4,552,312) (4,552,312) (5,848,665) (5,848,665) 0 0
Net proceeds 1,004,914,995 1,004,914,995 170,245,085 170,245,085 176,093,750 176,093,750Cumulation of
accretion of yield to maturity 2,574,114 1,338,260 20,682,096 1,516,085 20,682,096 1,516,085
Cumulation of amortisation of debt issuance expenses 1,112,553 578,407 326,237 23,915 0 0
1,008,601,662 1,006,831,662 191,253,418 171,785,085 196,775,846 177,609,835
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 148
27 Long-term borrowings (continued)
(i) Government Support Loan
The Government Support Loan which was obtained from the Federal Government in 1998 to finance the construction of the
Wangsa Maju water treatment plant and its related facilities, is repayable in equal annual instalments over a period of twenty
(20) years commencing on 11 April 1999. It is secured on all moneys standing to the credit of the Special Project Account.
The interest rate is fixed at 8% (2001:8%) per annum on the outstanding balance of the loan amount. PNSB is currently
negotiating with the Federal Government to restructure the loan in view of the lower bulk supply rate offered by the State
Government of Selangor.
(ii) Term Loan (‘DSS II’)
The Term Loan to finance the Sungai Selangor Water Supply Scheme Phase 2 Stage II - Distribution Supply System II
(‘DSS II’) project is repayable in five (5) unequal instalments commencing on 31 October 2001 and thereafter on 2 January
2003. The subsequent repayments will be on an annual basis until year 2006. The Term Loan (DSS II) is secured via the
assignments of the DSS II construction contract and project account, proceeds from the DSS II project and the designated
account, contractors’ performance bond and insurance policies on the DSS II project. Interest is payable semi-annually and
fixed at 7.60% (2001: 7.60%) per annum.
(iii) Al-Bai’ Bithaman Ajil Bonds and Al-Murabahah Commercial Papers/Al-Murabahah Medium Term Notes
On 12 October 2000, PNSB entered into several agreements with United Overseas Bank (Malaysia) Berhad and various
parties to raise RM1,020 million 10-Year Al-Bai’ Bithaman Ajil Islamic Debt Securities primary bonds together with
non-detachable secondary bonds (‘BaIDS’) and RM350 million Al-Murabahah Commercial Papers (‘MCPs’)/Al-
Murabahah Medium Term Notes (‘MMTNs’) Issuance Facility. Subsequently, on 28 October 2000, PNSB issued the
entire BaIDS and RM120 million of MCPs, the proceeds of which were utilised mainly to repay the Revolving
Underwriting Facility of RM800 million and Term Loan of RM300 million.
The BaIDS primary bonds will mature beginning 27 October 2005 and on an annual basis, for each series issued. The
non-detachable BaIDS secondary bonds are redeemable semi-annually from the date the primary bonds were issued, at
rates of 7% to 8% (2001:7% to 8%) per annum during the financial year on the primary bonds outstanding.
The MCPs/MMTNs will expire five (5) years from the date of agreement i.e. 12 October 2005. The tender rates ranged
between 2.80% and 3.20% (2001:2.80% and 3.12%) per annum during the financial year.
The facilities for the BaIDS, MCPs and MMTNs are secured by way of deposit of an aggregate sum in the DSRA equivalent
to twelve (12) months projected payment obligations under the BaIDS and MCPs/MMTNs that are outstanding at any point
in time. PNSB is not entitled to withdraw any money from the DSRA without prior consent of the Security Trustee except
on condition that the BaIDS, MCPs and MMTNs have been fully redeemed. In addition, the facilities are also secured by fixed
charges over all the assets of PNSB, the rights of PNSB under the concession agreements, construction contracts and project
agreements undertaken by PNSB.
Puncak Niaga Holdings Berhad Annual Report 2002 149
27 Long-term borrowings (continued)
(iii) Al-Bai’ Bithaman Ajil Bonds and Al-Murabahah Commercial Papers/Al-Murabahah Medium Term
Notes (continued)
No dividend by PNSB will be declared and paid where inter-alia:
• the outstanding balance in the DSRA is less than 1.0 time of the aggregate quantum of the Issuer’s payment obligations
under the BaIDS and MCPs/MMTNs for a period of twelve (12) months commencing from the date on which the dividend
is contemplated; or
• the Annual Debt Service Cover Ratio and the Forward Debt Service Cover Ratio are less than 1.7 times.
The Company will also be required to maintain the following financial ratios, which will be measured annually
commencing on 31 December 2001:
(i) Interest Cover Ratio of at least 2.0 times;
(ii) Debt Equity Ratio of not more than 4.0 times; and
(iii) Annual Debt Service Cover Ratio of at least 1.25 times.
(iv) Redeemable Unconvertible Junior Notes
On 20 November 2001, the Company issued RM546,875,000 Nominal Value 15-Year Redeemable Unconvertible Junior
Notes (‘RUN’) with 109,374,869 free detachable warrants at an issue price of RM0.322 per RM1.00 nominal value of RUN
on the basis of RM5.00 nominal value of RUN with one (1) free warrant for every four (4) existing ordinary shares of RM1.00
each held in the Company. The RUN was offered to the entitled shareholders and is constituted by a Trust Deed dated
5 September 2001. The RM176 million proceeds from the RUN issue was immediately utilised to subscribe for the JNA
issued by PNSB, the Company’s wholly-owned subsidiary. PNSB subsequently, utilised the proceeds to repay RM168 million
of its MCPs with the remaining balance utilised for its working capital purposes.
The main features of the RUN and warrants are as follows:
(a) The RUN carries a coupon rate of 2.5% per annum payable semi-annually for the immediate ten (10) years from the date
of the issue of the RUN and 3.5% per annum payable semi-annually thereafter for the next five (5) years.
(b) The Company shall redeem the RUN in ten (10) equal instalments each comprising 10% of the aggregate nominal value
of all outstanding RUN commencing on the sixth (6th) anniversary of the date of issue of the RUN. On the tenth (10th)
anniversary of the date of issue of the RUN, the Company has the option to redeem the RUN by paying the principal
amount outstanding on that date. On the same day, the holders of the RUN also have the option to sell the RUN back to
the Company for a consideration equivalent to the principal amount outstanding on that day.
(c) The RUN and the warrants are transferable and are quoted on the Kuala Lumpur Stock Exchange.
(d) The RUN is secured on the JNA issued by PNSB. The Company is also required to create a security account to receive
only proceeds from coupon payment and redemption of the JNA by PNSB, and thereafter to pay the coupon payment and
redemption of the RUN.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 150
27 Long-term borrowings (continued)
(iv) Redeemable Unconvertible Junior Notes (continued)
(e) Holders of the warrants have the right to subscribe for new ordinary shares of the Company in cash at any time during the
period commencing one (1) day after the date of issue of the warrants and ending on the date being five (5) years from the
date of issue of the warrants (‘exercise period’). The exercise price of the warrants is RM2.62 per new ordinary share of the
Company subject to adjustments under certain circumstances in accordance with the provisions of the Deed Poll dated
5 September 2001.
(f) The warrants that are not exercised during the exercise period will lapse and become void thereafter.
(g) The new ordinary shares issued arising from the exercise of the warrants during the exercise period shall rank pari-passu
in all respects with the then existing ordinary shares of the Company except that they shall not be entitled to any
dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of
the said new ordinary shares.
The Company is restricted from declaring and paying any dividends:
(i) if there is any amount due but not paid under the RUN; or
(ii) in the event a default has occurred or is continuing and has not been waived.
(v) Effective interest rates
The effective interest rates per annum applicable to conventional long-term borrowings i.e. not under the basis of Islamic
banking principles, at the balance sheet date were as follows:
Effective interest rate per annum2002 2001
% %
Group
Government Support Loan 8.00 8.00
Term Loan (DSS II) 7.60 7.60
Group and Company
Redeemable Unconvertible Junior Notes 7.30 7.70
(vi) Estimated fair values
The carrying amounts of the RUN of the Group and of the Company at balance sheet date approximated their fair values.
The fair values of other conventional long-term borrowings at balance sheet date were as follows:
Carrying Fairamount value
RM RM
Group
Government Support Loan (Note 35) 121,775,579 120,051,923
Term Loan (DSS II) (Note 35) 171,936,831 171,451,870
Puncak Niaga Holdings Berhad Annual Report 2002 151
28 Share capital
Group Company2002 2001 2002 2001
RM RM RM RM
Ordinary share of RM1.00 each
Authorised:
At 1 January 1,000,000,000 500,000,000 1,000,000,000 500,000,000
Increased during the financial year 0 500,000,000 0 500,000,000
At 31 December 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Issued and fully paid up:
At 1 January 437,500,000 437,500,000 437,500,000 437,500,000
Issued during the financial year:
Exercise of options under ESOS 1,778,000 0 1,778,000 0
At 31 December 439,278,000 437,500,000 439,278,000 437,500,000
During the financial year, 1,778,000 new ordinary shares of RM1.00 each were issued by the Company for cash arising from
the exercise of options by eligible employees pursuant to the Company’s Employees’ Share Option Scheme at an exercise price
of RM2.37 per share.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of
the Company.
Employees’ Share Option Scheme
The Company’s Employees’ Share Option Scheme (‘ESOS’), governed by the ESOS Bye-Laws, was principally approved by the
shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001 and became effective following the
implementation by the Company on 25 February 2002. The ESOS shall be in forced for a duration of five (5) years
commencing from 25 February 2002.
The salient features of the ESOS are as follows:
(a) The ESOS is set up for the participation in ordinary shares of the Company only. The maximum number of new ordinary
shares which may be made available under the ESOS shall not exceed 10% of the total issued and paid up ordinary shares
of the Company at the point in time when an offer is made. At the commencement of the ESOS, the total number of new
ordinary shares available for offer was 43,750,000 ordinary shares of RM1.00 each.
(b) Eligible employees are those who have been in service of the Group for a continuous period of at least one (1) year
including full time Executive Directors who are involved in the day-to-day management and on the payroll of the Group.
(c) The ESOS is administered by the Option Committee which comprise the Executive Directors of the Company.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 152
28 Share capital (continued)
Employees’ Share Option Scheme (continued)
(d) The options granted under the ESOS may be exercised by the grantee by notice in writing to the Company during the
period commencing from the date of offer and before the expiry of the ESOS on 24 February 2007.
(e) The exercise price of the options at which the eligible employees are entitled to subscribe for the ordinary shares of
RM1.00 each in the Company under the ESOS is the weighted average market price of the shares of the Company as
quoted in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) market days immediately
preceding the respective dates of offer subject to a discount of not more than 10%, or at the par value of the ordinary
shares of the Company of RM1.00 each, whichever is higher.
(f) The eligible employee to whom the options have been granted has no right to participate, by virtue of the options, in any
share issue of any other company.
(g) The new ordinary shares issued arising from the ESOS shall rank pari-passu in all respects with the then existing ordinary
shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or other distributions,
the entitlement date of which is prior to the date of allotment of the said new ordinary shares.
(h) The basis on which the options may be exercised, up to the expiry of the ESOS on 24 February 2007, in accordance with
the Directors’ approval is as follows:
Number of Options Percentage of options exercisablegranted and
unexercised as atTranche 31 December 2002 2003 2004 2005 2006 2007*
% % % % %
1 30,524,000 45 71 90 100 100
2 2,843,000 49 71 92 100 100
33,367,000
* The ESOS expires on 24 February 2007
(i) The movements of the options over the ordinary shares of RM1.00 each of the Company granted under the ESOS during
the financial year are as follows:
Date of Exercise Number of share optionsoptions price At
Tranche granted per option Granted Exercised Lapsed** 31.12.2002
1 26.2.2002 RM2.37 33,422,000 (1,778,000) (1,120,000) 30,524,000
2 26.8.2002 RM2.47 2,933,000 0 (90,000) 2,843,000
36,355,000 (1,778,000) (1,210,000) 33,367,000
** Due to resignations or offers not taken up
Puncak Niaga Holdings Berhad Annual Report 2002 153
29 Retained earnings
The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of net dividends
up to approximately RM17,168,000 (2001:RM15,976,000) out of its retained earnings as at 31 December 2002, without
incurring additional tax liabilities.
30 Net cash generated from operation
Group Company2002 2001 2002 2001
RM RM RM RM
Net profit for the financial year 179,745,431 179,314,056 1,870,146 1,997,703
Adjustments for:
Depreciation of property, plant and equipment 4,142,885 3,950,523 88,045 95,404
Amortisation of project development expenditure 14,999,624 13,961,439 0 0
Amortisation of water treatment plants 81,946,473 80,782,067 0 0
Accretion of discount on bonds and notes 20,401,865 2,647,671 19,166,011 1,516,085
Amortisation of debt issuance expenses 836,468 512,996 0 0
Interest on hire-purchase 369,680 389,248 0 0
Gain on disposal of property, plant and equipment (510,404) (198,649) 0 0
Allowance for diminution in value of other investments 32,388 0 0 0
Taxation 368,212 374,770 804,303 846,760
Interest income (12,209,981) (10,940,557) (32,870,919) (3,201,340)
Interest expense 114,050,160 109,329,966 13,671,875 1,535,745
Changes in working capital:
- Receivables (219,324,077) (211,232,462) (1,364,236) (2,585,158)
- Payables 24,888,645 (15,373,267) (202,896) 1,257,082
Net cash generated from operations 209,737,369 153,517,801 1,162,329 1,462,281
31 Significant related party transactions and balances
CPMSB is a substantial corporate shareholder of the Company. Tan Sri Rozali bin Ismail, a Director of the Company has
substantial direct interest in shares in CPMSB.
In the normal course of business, the Company undertakes on agreed terms and prices, certain transactions with companies
deemed related parties by virtue of having a common substantial shareholder. The CPMSB group of companies and other
related parties, with whom the Group and Company transacted with, include the following:
Related parties Relationship
Mandai Sari Sdn. Bhd. A subsidiary of CPMSB
Syarikat Bekalan Air Selangor Sdn. Bhd. A subsidiary of CPMSB
RZ Management Services Sdn. Bhd. A Director related corporation
Puncak Niaga Overseas Capital Sdn. Bhd. A Director related corporation
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 154
31 Significant related party transactions and balances (continued)
The common Directors of PNSB, who are also Directors of the Company are Tan Sri Rozali bin Ismail, Ruslan bin Hassan,
Mat Hairi bin Ismail and Lee Miang Koi.
Ruslan bin Hassan and Lee Miang Koi, who are Directors of the Company, are also Directors of Unggul Raya (M) Sdn. Bhd.,
NS Water System Sdn. Bhd. and Puncak Research Centre Sdn. Bhd.
Tan Sri Rozali bin Ismail, Mat Hairi bin Ismail and Ruslan bin Hassan are also Directors of Ideal Water Resources Sdn. Bhd.
Ruslan bin Hassan is also the Director for Puncak Seri (M) Sdn. Bhd.
Significant related party transactions
The related party transactions undertaken in the normal course of business are on terms and prices agreed with the respective
related parties.
The significant related party transactions during the financial year are as follows:
Group2002 2001
RM RM
Operating and maintenance charges by Mandai Sari Sdn. Bhd. 65,320,322 68,909,495
Repayment of advance to Syarikat Bekalan Air Selangor Sdn. Bhd. 0 4,347,241
Management fees charged by Puncak Niaga Overseas Capital Sdn. Bhd. 0 270,000
Management fees charged by Mandai Sari Sdn. Bhd. 500,004 500,004
Secretarial fees charged by RZ Management Services Sdn. Bhd. 240,000 240,000
Related party balances
Related party balances which arose from the above significant related party transactions and remained outstanding at the
balance sheet date, are as follows:
GroupRelated party Type of transaction 2002 2001
RM RM
Payables
Mandai Sari Sdn. Bhd. Operating and maintenance charges 70,897,978 44,753,806
RZ Management Services Sdn. Bhd. Secretarial fees 81,000 100,000
70,978,978 44,853,806
Puncak Niaga Holdings Berhad Annual Report 2002 155
32. Capital Commitments
Group2002 2001
RM RM
Commitment under the terms of the Privatisation Cum Concession Agreement dated
22 September 1994 for the rehabilitation and refurbishment of water treatment facilities 10,265,062 16,933,000
Commitment under the terms of the Construction Cum Operation Agreement dated
22 March 1995 for the construction and completion of Sungai Selangor Water Supply
Scheme Phase 2 Stage II 0 500,000
33. Contingent Liabilities
Group Company2002 2001 2002 2001RM RM RM RM
Unsecured
Corporate guarantee given to a bank for facilities
granted to a subsidiary 0 0 50,000,000 50,000,000
Trade and performance guarantees
extended to third parties 26,451,500 17,448,000 0 0
34 Segmental reporting - Group
Segmental analysis is not presented as the Group is primarily involved in the operation, maintenance, construction,
rehabilitation and refurbishment of water treatment facilities and operates principally in Malaysia.
35 Financial instruments
Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise. These includes, amongst others, investments, deposits, cash and bank balances, receivables,
payables and borrowings.
Fair values
There is no disclosure of fair value for investments in subsidiaries and associate, and borrowings under the basis of Islamic
banking principles as these are excluded from MASB Standard 24 “Financial Instruments: Disclosure and Presentation”.
Notes to the Financial Statementsfor the financial year ended 31 December 2002
Puncak Niaga Holdings Berhad Annual Report 2002 156
35 Financial instruments (continued)
Fair values (continued)
The carrying amounts of other financial assets and liabilities of the Group and of the Company at the balance sheet date
approximated their fair values except as set out below:
GroupCarrying Fair
Note amount valueRM RM
Financial asset
Long-term receivables 19 165,447,001 162,742,451
Financial liabilities
Hire-purchase payables 25 (4,040,379) (4,306,549)
Long-term borrowings:
- Government Support Loan 27 (121,775,579) (120,051,923)
- Term Loan (DSS II) 27 (171,936,831) (171,451,870)
(297,752,789) (295,810,342)
CompanyCarrying Fair
Note amount valueRM RM
Financial asset
Advances to a subsidiary 17 361,368,807 345,807,471
36 Significant events during the financial year
(a) The Company implemented an ESOS on 25 February 2002. The ESOS, governed by the ESOS Bye-Laws, was principally
approved by the shareholders at the Extraordinary General Meeting of the Company held on 26 June 2001. The ESOS
shall be in forced for a duration of five (5) years commencing from 25 February 2002.
(b) On 4 March 2002, the Company entered into a Second Supplemental Agreement with N.S. Water Sdn. Bhd., Eastern
Utilities Sdn. Bhd. and Lembaga Pemegang-Pemegang Amanah Yayasan Negeri Sembilan for the purpose of extending
the Memorandum of Understanding (‘MOU’) dated 20 December 2000 by yet another six (6) months with effect from
20 December 2001 up to 30 June 2002. The MOU sets out the respective parties mutual intention and understanding
in respect of the proposed privatisation of Jabatan Bekalan Air Negeri Sembilan by N.S. Water Konsortium Sdn. Bhd.
With the execution of the said supplemental agreement, the MOU shall continue to subsist unless terminated by the
occurrence of any of the events as stated in Clause 5 of the MOU.
On 12 August 2002, the Company entered into a Third Supplemental Agreement with N.S. Water Sdn. Bhd., Eastern
Utilities Sdn. Bhd. and Lembaga Pemegang-Pemegang Amanah Yayasan Negeri Sembilan for the purpose of extending
the MOU dated 20 December 2000 by a further six (6) months with effect from 1 July 2002 up to 31 December 2002.
Puncak Niaga Holdings Berhad Annual Report 2002 157
36 Significant events during the financial year (continued)
(c) On 28 January 2002, the Company formed a consortium with Lanco Infratech Ltd. and Kris Heavy Engineering &
Construction Sdn. Bhd. to submit a tender bid to undertake the Chennai Water Supply Augmentation Project
1 - Package III (‘Chennai Project’) which involves the supply and laying of water supply pipelines (including a 5-year
operation and maintenance contract). On 6 November 2002, the Company, on behalf of the consortium, received a letter from
the Chennai Metropolitan Water Supply and Sewereage Board of India informing its acceptance of the consortium’s tender
bid. The total contract sum awarded is INR292,47,05,102.76 (Rupees Two Hundred and Ninety Two Crores Forty Seven
Lakhs Five Thousand One Hundred and Two and Paise Seventy Six) which is equivalent to approximately RM234 million.
The Chennai Project shall be undertaken by the consortium via the establishment of an unincorporated joint venture,
comprising the Company, Lanco Infratech Ltd. and Kris Heavy Engineering & Construction Sdn. Bhd., with a
participating ratio of 70%:20%:10% respectively. The unincorporated joint venture has not commenced operations as at
31 December 2002.
37 Significant event subsequent to balance sheet date
On 24 March 2003, the unincorporated joint venture mentioned in Note 36(c) above, accepted credit facilities totalling
INR950 million (equivalent to approximately RM76 million) from a licensed bank in India. The credit facilities are secured
by way of a Standby Letter of Credit (‘SBLC’), the facility of which was granted to the Company by a licensed bank in Malaysia.
Todate, the cumulative amount of SBLC issued amounted to approximately RM46 million.
Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965
Puncak Niaga Holdings Berhad Annual Report 2002 158
We, Tan Sri Rozali bin Ismail and Mat Hairi bin Ismail, being two of the Directors of Puncak Niaga Holdings Berhad, state
that, in the opinion of the Directors, the financial statements set out on pages 120 to 157 are drawn up so as to give a true
and fair view of the state of affairs of the Group and of the Company as at 31 December 2002 and of the results and cash flows
of the Group and of the Company for the financial year ended on that date in accordance with the applicable approved
accounting standards in Malaysia and the provisions of the Companies Act, 1965.
Signed on behalf of the Board of Directors in accordance with their resolution dated 23 April 2003.
Tan Sri Rozali bin Ismail
Director
Mat Hairi bin Ismail
Director
Statutory Declaration
I, Mat Hairi bin Ismail, being the Director primarily responsible for the financial management of Puncak Niaga Holdings
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 120 to 157 are, in my opinion, correct
and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the
Statutory Declarations Act, 1960.
Mat Hairi bin Ismail
Director
Subscribed and solemnly declared by the abovenamed Mat Hairi bin Ismail at Kuala Lumpur, Malaysia on 23 April 2003.
Before me
Pasiah Muridan
(No. W187)
Commissioner for Oaths
Puncak Niaga Holdings Berhad Annual Report 2002 159
We have audited the financial statements set out on pages 120 to 157. These financial statements are the responsibility of the
Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by Directors, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable
approved accounting standards in Malaysia so as to give a true and fair view of:
(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(ii) the state of affairs of the Group and of the Company as at 31 December 2002 and of the results and cash flows of the
Group and Company for the financial year ended on that date; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
The names of the subsidiaries of which we have not acted as auditors are indicated in Note 13 to the financial statements. We
have considered the financial statements of these subsidiaries and the auditors’ reports thereon.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financial
statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial
statements and we have received satisfactory information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not
include any comment made under subsection (3) of Section 174 of the Act.
PricewaterhouseCoopers
(AF: 1146)
Chartered Accountants
Mohd Daruis Zainuddin
(969/03/05(J/PH))
Partner of the firm
Kuala Lumpur
23 April 2003
Report of the Auditors to the Members of Puncak Niaga Holdings Berhad
Puncak Niaga Holdings Berhad Annual Report 2002 160
NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of Puncak Niaga Holdings Berhad
(416087-U) will be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara,
60000 Kuala Lumpur on Wednesday, 25 June 2003 at 9.30 a.m. for the following purposes:-
1. To receive the Audited Accounts of the Company for the financial year ended 31 December 2002 Resolution 1
and the Reports of the Directors and Auditors thereon.
2. To re-elect the following Directors of the Company retiring in accordance with Article 98 of the
Company's Articles of Association:-
(a) Encik Mat Hairi Bin Ismail Resolution 2
(b) YBhg Dato’ Hari Narayanan a/l Govindasamy Resolution 3
3. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company and to authorise Resolution 4
the Directors of the Company to fix their remuneration.
AS SPECIAL BUSINESS:-
To consider and, if thought fit, to pass the following Ordinary Resolution:-
4. Allotment Of Shares Pursuant To Section 132D Of The Companies Act, 1965 Resolution 5
5. To transact any other ordinary business of which due notice shall have been given.
BY ORDER OF THE BOARD
TAN BEE LIAN (MAICSA 7006285)
Secretary
Kuala Lumpur
3 June 2003
Notice of Annual General Meeting
"THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company
and the approvals of the relevant governmental/regulatory authorities, the Directors of the
Company be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to
issue shares in the Company from time to time and upon such terms and conditions and for such
purposes as the Directors of the Company may deem fit provided that the aggregate number of
shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the
Company for the time being AND THAT the Directors of the Company be and are hereby also
empowered to obtain the approval for the listing of and quotation for the additional shares so issued
on the Kuala Lumpur Stock Exchange AND FURTHER THAT such authority shall continue to
be in force until the conclusion of the next Annual General Meeting of the Company."
Puncak Niaga Holdings Berhad Annual Report 2002 161
Notes:-
1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A
proxy need not be a member of the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly
authorised or if such appointer is a corporation, it must be either under its seal or under the hand of an officer or
attorney duly authorised.
3. The instrument appointing the proxy must be deposited at the Registered Office of the Company at Suite 1401-1406,
14th Floor, Plaza See Hoy Chan, Jalan Raja Chulan, 50200 Kuala Lumpur not less than 48 hours before the time set for
holding the Meeting or any adjournment thereof.
4. Explanatory Note On Special Business:-
Resolution 5:-
The Ordinary Resolution proposed under item 4, if passed, will give the Directors of the Company, from the date of
the above Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company for such
purposes as the Directors of the Company consider would be in the interest of the Company. The authority will,
unless revoked or varied at a General Meeting, expire at the next Annual General Meeting of the Company.
Statements Accompanying the Noticeof Annual General Meeting
Puncak Niaga Holdings Berhad Annual Report 2002 162
Particulars of Directors standing for re-election at the Sixth Annual General Meeting:-
Names of Retiring Directors Encik Mat Hairi Bin Ismail YBhg Dato’ Hari NarayananDetails a/l Govindasamy
Age 41 53
Nationality Malaysian Malaysian
Qualification Bachelor in Accounting (Hons) Degree Bachelor Degree in Electrical and from Universiti Kebangsaan Malaysia Electronics Engineering from
Polytechnic of Newcastle-Upon- Tyne, England
Position in PNHB Executive Director, Finance Division Independent Non-Executive Director
Working Experience & Encik Mat Hairi has 18 years of YBhg Dato’ Hari has 26 years of Occupation working experience. For details, working experience. For details,
please refer to his profile on page 23 please refer to his profile on pageof the Annual Report 27 of the Annual Report
Directorships in (1) WWE Holdings Bhd (1) Tenaga Nasional Berhadother public companies (2) U-Wood Holdings Berhad (2) SP Setia Berhad
Details of attendance at 4/5 (80%) 3/5 (60%)Board Meetings
The place, date and hour of the Please refer to page 69 of the Please refer to page 69 of the Board Meetings Annual Report Annual Report
Equity securities interests in Please refer to pages 106 and 109 Please refer to pages 106 and 109PNHB and its subsidiaries of the Annual Report of the Annual Report
Family relationship with any Encik Mat Hairi is the younger brother Nonedirector and/or substantial of YBhg Tan Sri Rozali Ismail, the shareholder of PNHB Executive Chairman and substantial
shareholder of PNHB; andEncik Shaari Ismail, who is asubstantial shareholder of PNHB
Any conflict of interest Encik Mat Hairi is a substantial Nonewith PNHB shareholder of WWE Holdings Bhd,
which is an investment holding company and contractor for the provision of engineering services related to design, fabrication, installation and commissioning of water, wastewater treatment, environmental facilities and construction activities
List of convictions for offences None None(other than traffic offences) within the past 10 years
Puncak Niaga Holdings Berhad Annual Report 2002 163
Other Compliance Information
(a) Share-Buy Backs
The Company did not purchase any of its own shares during the financial year ended 31 December 2002.
(b) Options, Warrants or Convertible Securities
The Company had issued two (2) tranches of share options on 26 February 2002 and 26 August 2002 respectively
pursuant to the ESOS which became effective on 25 February 2002. During the financial year 2002, 1,778,000
options had been exercised. On warrants, none of the warrant holders converted their warrants into ordinary shares
during the financial year ended 31 December 2002.
(c) American Depository Receipt (ADR) / Global Depository Receipt (GDR)
The Company does not sponsor any ADR or GDR programme.
(d) Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by
the relevant regulatory bodies during the financial year ended 31 December 2002.
(e) Non-Audit Fees
During the financial year ended 31 December 2002, the Company did not pay any non-audit fees to the external auditors.
(f) Variations in Results
The Company’s/Group’s audited results for the financial year ended 31 December 2002 did not vary from the
unaudited results which was announced to the KLSE on 26 February 2003.
(g) Profit Guarantee
Not applicable.
(h) Revaluation Policy on Landed Properties
The Group does not adopt a policy of regular revaluation of its property.
(i) Recurrent Related Party Transaction
The Company did not enter into any recurrent related party transaction which requires the shareholders’ mandate
during the financial year ended 31 December 2002.
(j) Directors’ Remuneration
The details of the Directors’ Remuneration at Company and Group Level for the financial year ended 31 December
2002, in successive bands of RM50,000 are tabulated overleaf:-
Range of Remuneration Company Level Group Levelper annum No. of Executive No. of Non-Executive No. of Directors
Directors Directors
RM1 to RM50,000 - - 1
RM50,001 to RM100,000 - 2 2
RM100,001 to RM150,000 - 1 1
RM150,001 to RM200,000 - - 1
RM600,001 to RM650,000 - - 1
RM900,001 to RM950,000 - - 2
RM1,350,001 to RM1,400,000 - - 1
(k) Material Contracts Involving Directors’ and Substantial Shareholders’ Interests
During the financial year ended 31 December 2002, neither the Company nor its subsidiaries entered into any material
contracts with the Directors and substantial shareholders of the Company. However, material contracts involving Directors and
substantial shareholders which are still subsisting at the end of the financial year ended 31 December 2002, are as follows:-
Date Nature of Contract Parties Consideration/Mode Relationship withof Satisfaction Director/Substantial
Shareholder
8 October Operation & Maintenance Puncak Niaga (M) PNSB to pay Mandai Sari a Mandai Sari is a 1994 Agreement - For Mandai Sdn Bhd (PNSB) and fixed monthly fee of RM41,667 subsidiary of Central
Sari Sdn Bhd to undertake Mandai Sari Sdn Bhd as well as for treated water Plus (M) Sdn Bhd (CP),the operation and (Mandai Sari) produced and supplied, which whereby CP is amaintenance of the 27 is measured in accordance with substantial shareholder water treatment plants the provisions of the PCCA of Puncak Niagaunder the Privatisation Holdings Berhad Cum Concession (PNHB)Agreement (PCCA)
8 October Refurbishment Works PNSB, Mandai Sari and Contract sum of RM150 million Mandai Sari is a 1994 Agreement - For CGE C.G.E Utilities (M) Sdn which is being paid subsidiary of CP,
to undertake the Bhd (CGE) progressively to CGE based on whereby CP is arefurbishment works for physical progress and subject substantial shareholderthe 27 water treatment to verification by Perbadanan of PNHBplants under the PCCA Urus Air Selangor Berhad
31 May Operation & Maintenance PNSB, Mandai Sari, Mandai Sari to pay CGE for Mandai Sari is a 1995 Sub-Contract - For CGE and Compagnie treated water produced and subsidiary of CP,
Mandai Sari to sub- General Des Eaux supplied, which is measured in whereby CP is a contract the above (now known as accordance with the provisions substantial shareholder Operation & Maintenance Vivendi Water) of the agreement of PNHBAgreement to CGE
Other Compliance Information
Puncak Niaga Holdings Berhad Annual Report 2002 164
Puncak Niaga Holdings Berhad Annual Report 2002 167
Proxy Form
I/We
of
being a Member/Members of the Company hereby appoint
of
as my/our proxy, to vote for me/us and on my/our behalf at the Sixth Annual General Meeting of Puncak Niaga Holdings
Berhad to be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara,
60000 Kuala Lumpur on Wednesday, 25 June 2003 at 9.30 a.m. and at any adjournment thereof, as indicated below:-
No. Resolution For Against
1. To receive the Audited Accounts of the Company for the financial year ended 31 December 2002 and the Reports of the Directors andAuditors thereon.
2. To re-elect Encik Mat Hairi Bin Ismail as Director of the Company.
3. To re-elect YBhg Dato’ Hari Narayanan a/l Govindasamy as Director of the Company.
4. To re-appoint Messrs PricewaterhouseCoopers as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration.
5. To empower the Directors of the Company to issue shares pursuantto Section 132D of the Companies Act, 1965.
Please indicate with a cross (✗ ) how you wish your votes to be cast in respect of each Resolution. In the absence of specific
directions, your proxy will vote or abstain as he thinks fit.
No. of shares held
Signature(s)/Common Seal of Shareholder(s) Signed this day of 2003
Notes:
1.A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy
need not be a member of the Company.
2 The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly
authorised or if such appointer is a corporation, it must be either under its seal or under the hand of an officer or attorney
duly authorised.
3.The instrument appointing the proxy must be deposited at the Registered Office of the Company at Suite
1401-1406, 14th Floor, Plaza See Hoy Chan, Jalan Raja Chulan, 50200 Kuala Lumpur not less than 48 hours before the
time set for holding the Meeting or any adjournment thereof.
Puncak Niaga Holdings Berhad Annual Report 2002 168
Puncak Niaga Holdings Berhad (416087-U)Suite 1401 - 1406, 14th Floor
Plaza See Hoy ChanJalan Raja Chulan
50200 Kuala Lumpur
Fold Here
Fold Here
Stamp
Malaysia’s Water Specialist • Pakar Air Malaysia
Puncak Niaga Holdings Berhad (416087-U)
Suite 2601-2606, 26th Floor, Plaza See Hoy Chan,
Jalan Raja Chulan, 50200 Kuala Lumpur.
Tel: 03-2031 8648 Fax: 03-2031 8658
website: www.puncakniaga.com.my
e-mail: [email protected]
A n n u a l R e p o r t 2 0 0 2